The tax measures in the UK Budget delivered on October 28 may have significant implications for Israelis with UK assets and businesses. The Budget was aptly entitled "Breathing Space for Today. Fresh Hope for the Future". Its stated aim was to protect most individuals and businesses from tax increases whilst putting the UK on a stronger footing for the future. The measures include new reliefs and incentives for founder of innovative companies.
Israelis need to consider the changes from both a UK and Israeli tax perspective, and take professional tax advice where appropriate.
UK property investments and savings income
The 2025 Budget announced that tax rates on property income and savings income would increase by 2% from April 2027. The latest Budget goes further, announcing a further 2% increase in both sets of rates.
From 6 April 2027, for individual landlords, the property income tax rates will be 24%, 44% and 49%. The cumulative 4% increase will put additional pressure on landlords already facing higher financing costs and increased regulatory demands. 49% is a significant tax burden to bear. The distinction between property held personally and property held via a company is important and entails different tax treatments. Any decision to incorporate a property portfolio or restructure ownership should take account of the associated costs and potential tax consequences in both countries.
The same cumulative increase applies to savings income tax rates which will also reach 24%, 44% and 49% from 6 April 2027.
Incentives for founders of innovative companies
For Israelis who own, or are considering establishing, a UK business, two measures deserve particular attention.
The lifetime limit for Business Asset Disposal Relief ("BADR") will fall from £1 million to £500,000 for qualifying disposals made from 6 April 2027. BADR provides a favorable 18% Capital Gains Tax rate on qualifying gains within the applicable lifetime limit. Business owners contemplating a sale should review their eligibility, the timing of a potential disposal and their tax exposure.
Along with the Budget, the UK published the "Entrepreneurship in the UK" prospectus, firmly stating its aim to make the UK "the best place in the world to start a business, scale it, and stay for the long term". The Budget introduced a new Founders’ Relief from 6 April 2027, offering a 10% Capital Gains Tax rate on up to £10 million of lifetime gains for qualifying founders of high-growth and innovative companies. The government has launched a technical consultation on how it will work and who will be eligible. The tax treatment of a disposal may also depend on the shareholding structure, the nature of the business and the individual's residence.
The government’s plan to strengthen the tax environment also includes making Research & Development tax reliefs easier to access by simplifying administration and improving venture capital schemes.
The Budget also introduces greater flexibility for certain employee share schemes, including changes to Enterprise Management Incentives (EMI). These may be relevant to Israeli founders establishing UK operations and companies seeking to attract or retain key employees through share options.
Succession planning and Inheritance Tax
For Israelis holding UK assets, inheritance tax remains an important consideration. The Budget announced a targeted change to the inheritance tax treatment of certain liabilities associated with trust property. The measure will clarify when liabilities may reduce the value of assets for inheritance tax purposes, align the treatment of trust liabilities with that of personal liabilities and strengthen anti-avoidance provisions. It will apply to deaths and other chargeable events occurring on or after 28 October 2026.
The relevant exposure will depend on the individual's circumstances and the nature and location of the assets.
Breathing room?
Overall, the Budget avoids broad-based tax increases and maintains the headline rates of income tax, National Insurance and VAT. It also maintains the government’s commitment to a 25% headline Corporation Tax rate.
However, for landlords, savers and some business owners, the targeted changes are impactful. The reduction in the BADR lifetime limit may affect those approaching a business exit, while the higher property and savings income rates will reduce net returns for some investors.
With several measures taking effect from April 2027, there is time to review existing arrangements before the changes come into force.
Claire Shelemay, BFP FCA, is the founder of CrownStone Consulting - a UK tax boutique in Tel Aviv focusing on UK tax advisory and UK-Israel tax issues.
Published by Globes, Israel business news - en.globes.co.il - on November 9, 2026.
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