Issued by: HM Treasury

Reforms to cut red tape, make savings, and improve businesses’ experience of the tax system have been set out today (28 April 2025) by Tax Minister James Murray, helping to deliver the Plan for Change by creating the conditions for growth.

• VOA to become part of HMRC to increase efficiency, business experience and ministerial accountability

• Comes ahead of government’s review of the status of hundreds of Arm’s-Length Bodies to rewire Whitehall for a more agile state

• Measure features as part of government’s Tax Update: Simplification, Administration and Reform (TUSAR) published today

As part of the government’s drive to slash red tape, increase oversight and ministerial accountability and rewire Whitehall to be more productive and agile, the Valuation Office Agency (VOA), the arm’s-length body (ALB) responsible for valuing properties for council tax and business rates, will be brought into its parent department HM Revenue & Customs (HMRC) by April 2026.

This is the latest ALB to be moved into central government following the decision last month that the world’s biggest quango, NHS England, will be brought back into the Department of Health and Social Care (DHSC).

Exchequer Secretary to the Treasury, James Murray, said:

"We are determined to reduce the hassle of the tax system for British businesses and taxpayers. Ending the inefficiency and duplication of a standalone VOA will help us drive change faster and improve value for money.

"This government is determined to make public services more productive, helping to deliver our Plan for Change and put more money in peoples’ pockets."

The VOA’s work supports the collection of over £60 billion in council tax and business rates each year, and also provides commercial property valuation services to the public sector.

The move will improve the experience of taxpayers and businesses by cutting the time spent managing taxes and upgrading the customer experience during the transition to a reformed business rates system.

Having become chair of HMRC’s board last year to strengthen political accountability and delivery, this will help deliver James Murray’s three priorities for HMRC: improving customer service, closing the tax gap, and modernising and reforming services.

The majority of the VOA’s functions will be brought into HMRC by April 2026, and is expected to deliver between 5 to 10% of additional savings in VOA administrative costs by 2028-29.

The announcement is part of the government’s Tax Update: Simplification, Administration and Reform (TUSAR) published today.

As part of this update, 41 measures to reform and simplify the tax and customs system have been announced, making it more modern and effective, and creating the right conditions to support the Prime Minister’s Plan for Change.

These measures include cutting red tape for small businesses by simplifying VAT administration through changes made to the VAT Capital Goods Scheme – a scheme allowing businesses to reclaim VAT on expensive capital items, based on their long-term use.

The government will bring forward legislation to remove computer equipment from the Scheme’s qualifying assets. It will increase the threshold value for capital expenditure value of on land, buildings and civil engineering work from £250,000 to £600,000.

This will free up time and resources spent on tax administration for around 105,000 commercial properties which will be removed from the scheme.

Benefitting businesses, the government has also today published a consultation on a VAT relief to encourage charitable donations.

Currently firms do not pay VAT on any goods they donate which are then sold on, for example through a charity shop. However, if goods, such as hygiene supplies and cleaning products, are not sold but are instead distributed free of charge to those in need, VAT must be paid for if it has been previously reclaimed by the business.

The consultation is to introduce a UK-wide VAT relief for a range of goods which businesses donate to charities to give away free of charge to people in need.

Mr Murray also announced that Scotch whisky makers will see an average 95% saving on their licensing costs from this summer through simplifying licensing.

Producers of traditional spirits drinks which are protected by geographic Indication status, such as ‘Scotch whisky’ or ‘Somerset Cider Brandy’, are required to pay verification fees to HMRC.

This can cost up to £11,410 every two years, and today James Murray announced that, from 1 July 2025 to 30 June 2031, all spirit producers will start paying a flat fee of £250 every two years, regardless of the product.

Further information

• For more information on the 41 reforms measures announced, read the Written Ministerial Statement (https://questions-statements.parliament.uk/written-statements/detail/2025-04-28/hcws607).

• The new VAT relief on donated goods could include goods which are donated to charities for them to use, however such an approach would be paired with protections against VAT evasion, such as a low value limit on eligible goods. For example, the relief would not permit the commercial arm of an organisation buying IT equipment then donating it to a charitable wing to avoid VAT. The consultation seeks views on this.

• Until today’s announcement, computers costing more than £50k were subject to the requirements of the Capital Good Scheme (CGS). The CGS was introduced in 1990 to ensure VAT recovery on long-life assets reflects their use over time. For land, buildings and engineering work, businesses need to review the taxable use annually over a 10-year period. It prevents schemes that use the asset for taxable activities, recover VAT, and then switch the use to exempt or non-business activity which would reduce the amount of VAT they should pay.

• The Spirit Drink Verification Scheme is for the registration and verification of geographical indicators (GI) associated with spirit drinks. For example, the term “Scotch Whisky”. Those registered under the scheme pay verification fees to HMRC as part of an assurance process which checks whether products meet the specification associated with that GI. Although not a formal licensing scheme, only those products verified may lawfully carry those GI terms to describe them.

• See the policy documents from the Tax Update Simplification and Reform Update 2025 (https://www.gov.uk/government/collections/tax-update-spring-2025-simplification-administration-and-reform).

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