The IRS enforces tax compliance through a combination of automated systems and audits, ranging from correspondence reviews to extensive, in-person examinations. Automated checks compare tax returns against prior filings and third-party data, while more complex audits typically involve large corporations, partnerships, and high-net-worth individuals and may span multiple years. Under IRC §6501, the IRS generally has three years to assess additional tax, extended to six years where more than 25% of gross income is omitted, and with no limitation in cases of fraud or failure to file. Taxpayers must retain adequate records to substantiate their returns, and in cross-border matters the IRS may seek extensive international documentation, often using treaty-based information exchanges.

If taxpayers fail to cooperate, the IRS has broad powers, including issuing administrative summonses, disallowing unsupported deductions, and, in certain large corporate audits, suspending the assessment period through designated summonses. Once tax is assessed, the IRS typically has ten years to collect, with enforcement escalating from notices to liens, levies, and, in extreme cases, asset seizures. Relief options remain available, such as instalment agreements or offers in compromise. Civil penalties are significant, with accuracy-related penalties commonly set at 20% of the underpayment, rising to 40% in certain transfer pricing cases, and some penalties applying on a strict liability basis. Serious misconduct may also trigger criminal prosecution, with potential fines and imprisonment.

Recent years have seen heightened enforcement activity, particularly focused on high-income individuals and large corporations. In 2024, the IRS reported recovering over US$1.3 billion from high-net-worth taxpayers, while field examinations recommended more than US$22 billion in additional tax, much of which remains under dispute. The Criminal Investigation Division identified over US$2.1 billion in tax fraud and achieved a conviction rate of approximately 90% on cases referred for prosecution, underscoring the continued intensity of IRS enforcement despite prior staffing challenges.

The One Big Beautiful Bill Act introduces “Trump Accounts”, a new type of individual retirement account designed for children. From 2026, an authorised person such as a parent or guardian may elect to open an account for a child who is a US citizen, has a Social Security number, and will be under 18 by the end of the relevant calendar year. The election will be made using Form 4547, expected to be available for 2026 tax filings, after which the Treasury Department will establish the account. Contributions may begin on 4 July 2026. Although final regulations are pending, IRS Notice 2025-68 outlines the framework, and further guidance is expected via trumpaccounts.gov once active.

Each Trump Account has a defined “growth period” running until the end of the year before the child turns 18, during which strict rules apply. Investments are limited to low-fee, non-leveraged US index funds, annual contributions are capped at $5,000 per child, and no distributions or tax deductions are permitted. Contributions may come from several sources, including a one-off $1,000 federal deposit for children born between 2025 and 2028, personal after-tax contributions, limited employer contributions, government or charitable Qualified General Contributions, and permitted rollovers. Once the growth period ends, the special restrictions fall away, and the account is generally treated as a traditional IRA under existing tax rules

The One Big Beautiful Bill Act, enacted on 4 July 2025, removes uncertainty around the U.S. federal transfer tax exemption by permanently increasing the estate and gift tax exemption to $15 million per individual from 1 January 2026, with inflation adjustments beginning in 2027. Portability of unused estate and gift tax exemption between spouses will continue, although GST exemption portability remains unavailable, despite the GST exemption also increasing to $15 million. The maximum marginal tax rate for estate, gift and GST taxes remains at 40 per cent, and the annual gift tax exclusion for 2026 will remain $19,000 per recipient, or $38,000 for married couples.

From 2026, new charitable deduction rules will apply. Non-itemising taxpayers may claim an additional deduction of up to $1,000 for direct charitable gifts, or $2,000 for joint filers, alongside the standard deduction ($16,100 for single filers and $32,200 for joint filers), excluding donations to donor-advised funds or similar vehicles. For itemising taxpayers, charitable deductions will only be available to the extent they exceed 0.5 per cent of adjusted gross income, and taxpayers in the highest income bracket will have their deduction benefit capped at an effective rate of 35 per cent. In addition, New York’s estate tax exemption will increase to $7,350,000 from 1 January 2026, with estates exceeding 105 per cent of this threshold losing the exemption entirely and being taxed on their full value; portability of unused exemption between spouses remains unavailable.

Inheritance Tax planning typically emphasises well-established tools such as trusts and gifts made more than seven years prior to death. However, a range of less commonly utilised strategies can also significantly contribute to the preservation of family wealth.

1. One such approach involves making regular gifts from surplus income. When these payments are genuinely from excess income and do not compromise your standard of living, they are immediately outside your estate, with no upper limit.
2. Homeowners also have opportunities to transfer property more effectively: gifting a share of your home to someone living with you can circumvent the usual “Gift with Reservation of Benefit” rules.
3. While transferring the entire property and paying full market rent to the new owner offers another method to exclude the property from your taxable estate.
4. Additional reliefs can further mitigate the Inheritance Tax (IHT) liability. The Residence Nil Rate Band (RNRB) provides noteworthy protection for homes passing to direct descendants, although it phases out for estates exceeding £2 million.
5. Deeds of Variation offer flexibility after death, enabling beneficiaries to redirect an inheritance within two years to achieve a more tax-efficient outcome.
6. Charitable legacies also serve a strategic purpose: leaving at least 10% of your net chargeable estate to charity reduces the IHT rate on the remaining estate from 40% to 36%, thereby increasing the value of your gift and decreasing the overall tax liability.

Nonetheless, effective estate planning extends beyond understanding technical rules. The most successful strategies are grounded in clear communication, thorough documentation, and professional advice. Complex arrangements whether involving property, surplus income gifting, or post-death variations can easily give rise to misunderstandings if intentions are not openly shared. Ensuring that your estate plan is legally sound, tax-efficient, and aligned with your family’s expectations is essential for facilitating a smooth and responsible transfer of your assets.

The Government’s announcement on 23 December 2025 to raise the Inheritance Tax (IHT) threshold for 100% Agricultural and Business Property Relief from £1 million to £2.5 million is welcome news for many farmers and business owners. Combined with the recent decision to allow the transfer of allowances between spouses, this change enables married couples to shield trading estates worth up to £5 million from IHT. However, despite being more moderate than earlier proposals, the adjustment fails to address the underlying issue of illiquidity in private enterprises. For those still affected, significant tax liabilities could force distressed sales, which may not always be feasible.

The changes also appear to disregard the original purpose of these reliefs to support intergenerational transfers of family businesses in the public interest. With limited tax revenue gains and no comprehensive impact assessment from HM Treasury or the Office for Budget Responsibility, concerns remain about rushed and poorly justified amendments. The lack of consultation, coupled with timing amid negative media coverage of rural policies, raises questions about legislative quality.

The UK will significantly expand the scope of its Trust Registration Service (TRS) from early 2026, bringing many more non UK trusts into the regime. Non UK trusts that acquired UK land or property before 6 October 2020 will now need to register if they still hold it, and all TRS registered non UK trusts will become subject to wider disclosure rules, including legitimate interest and third country entity requests, regardless of trustee residency. The removal of Stamp Duty Reserve Tax as a registration trigger slightly narrows the rules, but only on a non retrospective basis. Existing triggers post 2020 UK property acquisitions, UK tax exposure, and ongoing relationships with UK “relevant persons” remain unchanged, with limited exemptions available for vulnerable beneficial owners.

Trustees should review any UK property holdings ahead of implementation, assess potential UK tax exposure (including through nominee or corporate structures), and ensure beneficial ownership information is accurate and up to date. They may also need to consider disclosure exemption applications, monitor UK professional relationships that could trigger registration, and prepare for timely compliance, as newly registrable trusts will have only six months to register once the new rules take effect

Chancellor of the Exchequer Rachel Reeves set out tax-raising measures worth up to £26 billion in the Autumn Budget on 26 November 2025.

The increases will be achieved through a range of measures, including extending the freeze on Income Tax thresholds for a further three years

Tax increases

In addition to maintaining Income Tax thresholds, taxes on property, dividend and saving income will be increased.

The Budget also announced employee and employer National Insurance contributions (NICs) on salary sacrifice pension contributions above £2,000 a year and introduced a tax on homes valued at £2 million or more.

On spending, Ms Reeves took action to cut energy bills, freeze rail fares and end the two-child benefit cap.

Ms Reeves said: ‘I can tell you today that, for every family we are keeping our promise to get energy bills down and cut the cost of living with £150 taken off the average household energy bill from April.

‘Money off bills, and in the pockets of working people. That is my choice.’

For more information see the full statement Here.

Please do not hesitate to contact our team here at Frontier Group if you have any questions

Autumn 2025 Budget: Potential changes

Chancellor Rachel Reeves’ Autumn Budget, set for 26 November 2025, signals a decisive shift toward “tough but fair” fiscal policy aimed at restoring economic stability, reducing inflation, and creating conditions for interest rate cuts. Individuals should prepare for sweeping reforms across tax, property, family, and employment law. Although there is just over a week before the Budget there may be some changes that could still be made to protect against changes.

1. Trust and Tax Law: Wealth-Based Taxation on the Horizon
   Inheritance Tax (IHT) Reform

• Lifetime Gifting Cap: A £100,000 cap on lifetime gifts before IHT applies is proposed.
• Extended 10-Year Rule: The current 7-year rule for taper relief may be extended to 10 years.
• Taper Relief Removal: The government is considering eliminating taper relief entirely.
• Agricultural Property Relief: Revised proposals suggest a £5 million threshold, with assets above that potentially taxed at the full 40% rate.

Trusts and LLPs

• Trusts: New trusts may face stricter IHT rules and enhanced reporting obligations.
• LLPs: A new levy on Limited Liability Partnerships is under consideration, potentially impacting professional service structures.

Wealth and Exit Taxes

• Wealth Tax: A 2% annual levy on assets exceeding £10 million is under discussion, though concerns about capital flight persist.
• Exit Tax: A 20% tax on unrealized gains for wealthy individuals relocating abroad is being considered to prevent CGT avoidance.

Key Takeaway: Estate and trust planning strategies should be reviewed urgently. Clients considering gifts, trust formations, or relocation should act before the Budget is enacted.

2. Property Law: Structural Tax Overhaul
   Stamp Duty & Property Taxation

• SDLT Reform: Stamp Duty Land Tax may be replaced with a seller-based property tax.
• Council Tax Overhaul: A new local property tax based on updated valuations could replace council tax.
• Mansion Tax: An annual levy on high-value homes remains under active consideration.

Capital Gains Tax (CGT)

• Rate Alignment: CGT may be aligned with income tax rates, increasing liabilities for higher earners.
• Primary Residence Relief: Relief on the sale of high-value primary residences may be capped or removed, potentially triggering a 24% CGT on gains for higher-rate taxpayers.

Key Takeaway: Property transactions and ownership structures should be reviewed. Timing will be critical to mitigate potential tax increases.

3. Family Law: Pensions and Benefits in the Spotlight
   Pensions

• Tax Relief Cap: Pension tax relief may be capped at 30%.
• Inheritance of Pension Pots: From 2027, unused pension pots could become subject to IHT.

Child Benefit Reform

• Two-Child Cap: Changes to the cap and tapering of benefits are expected.

Key Takeaway: Divorce settlements and succession planning must account for pension and benefit reforms.

4. Employment Law: Rising Costs and Rights
   Payroll Taxes

• Lower Thresholds: A reduced threshold for NI liability is under review.

Worker Protections

• Flexible Work Rights: The Employment Rights Bill is expected to expand flexible working entitlements and protections.

 Key Takeaway: Employers should prepare for increased payroll costs and enhanced compliance obligations.

5. Income Tax: Subtle Increases Through Fiscal Drag

• Threshold Freeze: The freeze on personal and higher-rate income tax thresholds may extend to 2030, pulling more earners into higher tax bands—raising an estimated £8 billion.
• Rate Hike Rumours: While the government maintains it won’t raise headline rates, speculation persists about potential increases to meet fiscal targets.

Final Thoughts
The Autumn 2025 Budget is poised to reshape the UK’s fiscal landscape. With a focus on wealth redistribution, property reform, and increased employer obligations. The window for tax-efficient planning may be closing fast.

The One Big, Beautiful Bill Act of 2025 (OBBBA), signed into law on July 3, 2025, introduces sweeping changes to U.S. international tax rules. These updates aim to modernize cross-border taxation, enhance competitiveness, and provide clarity for multinational corporations. Below are the most significant provisions.

1. GILTI Gets a New Identity

The familiar Global Intangible Low-Taxed Income (GILTI) regime has been rebranded as Net CFTC Tested Income (NCTI). While the name changes, the mechanics remain broadly similar, with notable adjustments:

• Section 250 deduction reduced to 40%, resulting in an effective top rate of about 14% after foreign tax credits.
• Foreign tax credit (FTC) under Section 960 increased from 80% to 90%, easing the burden for U.S. shareholders of foreign corporations.

2. FDII Transforms into FDDEI

Foreign-Derived Intangible Income (FDII) is now Foreign-Derived Deduction Eligible Income (FDDEI). Key changes include:

• Section 250 deduction for FDDEI lowered to 33.34%, aligning its effective tax rate with NCTI at approximately 14%.
• This shift underscores OBBBA’s intent to harmonize treatment of export-related income and intangible assets.

3. Look-Through Rule Made Permanent

The Section 954(c)(6) look-through rule which was previously temporary is now permanent. This ensures that certain payments between related Controlled Foreign Corporations (CFCs) are not classified as passive income, reducing unexpected U.S. tax exposure and giving multinationals with complex structures long-term certainty.

4. BEAT Adjustments

The Base Erosion and Anti-Abuse Tax (BEAT)has included incremental changes:

• Rate increases from 10% to 10.5%.
• New exception for transactions involving countries with corporate tax rates of 18.9% or higher, mitigating double-taxation concerns.

5. Downward Attribution Repealed

OBBBA reinstates Section 958(b)(4), reversing a TCJA-era change. This prevents foreign corporations from being automatically attributed to U.S. entities, thereby reducing unnecessary CFC classifications and compliance burdens.

6. Other Noteworthy Provisions

• New Section 951B: introduces a regime for “Foreign Controlled U.S. Shareholders.”
• Section 863(b): updates sourcing rules for goods produced in the U.S. but sold abroad through foreign offices.
• Permanent look-through exception under Section 954(c)(6)(C).
• Section 960(d)(1): raises deemed-paid FTC for Subpart F income from 80% to 90%.

Effective Date: These changes apply to tax years beginning after December 31, 2025.

Why it matters

For U.S. multinationals, OBBBA’s international tax provisions represent a mix of opportunities and challenges. While higher foreign tax credits and permanent look-through rules offer relief, reduced deductions and BEAT adjustments may increase overall tax costs. Strategic planning will be essential to optimise global tax positions under the new regime.

The U.S. Treasury and IRS have officially withdrawn controversial proposed regulations (REG–112261–24 and REG–116085–23) that would have imposed stricter requirements on tax-free spin-offs and restructurings. The decision follows widespread criticism from tax professionals and revokes related guidance (Notice 2024-38).

With the withdrawal, Revenue Procedure 2025-30 reinstates more flexible rules from earlier procedures (2017-52 and 2018-53), easing requirements for private letter rulings. Taxpayers should review their current ruling requests to ensure compliance with the updated framework.

The rollback restores greater flexibility in structuring tax-free separations, especially in areas like deal structure changes, post-separation arrangements, and liability assumptions. However, scrutiny remains on monetization transactions under I.R.C. § 361, including timing, adjustments, and basis limitations. Careful planning is still advised.