Strengthened Reward Scheme Tax UK 2026/27 — Informant Rewards

HMRC's Strengthened Reward Scheme pays rewards to individuals whose information helps HMRC collect a large amount of unpaid tax from serious avoidance or evasion. The existing scheme guidance says a qualifying report can lead to a reward of 15% to 30% of the tax collected, excluding penalties and interest, where the information contributes to the collection of at least £1.5 million of tax.

The Finance Bill 2026–27 draft measure would introduce a withholding mechanism for these rewards. Under the proposal, HMRC would deduct Income Tax at the additional rate of 45% when paying an informant reward. The proposal is a collection mechanism: the reward is already taxable under current Income Tax law, and the final Self Assessment position can still produce further tax or a repayment.

This is not a general new tax on people who report wrongdoing, and it is not an employment PAYE rule. It is a narrow proposed withholding rule for rewards paid under the Strengthened Reward Scheme.

What is the Strengthened Reward Scheme?

The scheme is for individuals who report serious tax avoidance or evasion to HMRC. The published guidance describes cases involving large companies, wealthy individuals, offshore arrangements or avoidance schemes. It is intended for high-value information that can help HMRC recover a substantial amount of unpaid tax.

The scheme is not a general public reporting bonus for every tax discrepancy. HMRC decides whether the information meets the scheme requirements and whether it leads to the collection of the required amount of tax.

The guidance states that a reward may be between 15% and 30% of the tax collected, excluding penalties and interest. That percentage is the reward calculation under the scheme; it is not the Income Tax rate applied to the recipient.

What tax treatment applies now?

HMRC's Finance Bill policy paper says informant rewards are already taxable income under current law. If the reward is received in the course of a trade, it may be treated as a trading receipt. In other cases, HMRC describes it as miscellaneous income under section 687 of the Income Tax (Trading and Other Income) Act 2005.

Under the current arrangement described in the policy paper, rewards are paid gross and the recipient declares and pays any tax through Self Assessment. The existing tax classification depends on the recipient's facts; do not assume that every reward is employment income or a trading receipt.

If the reward creates a Self Assessment obligation, use the correct reporting route and retain HMRC's award documentation. The Self Assessment filing guide covers the general filing process, but it cannot determine the legal classification of a particular informant reward.

What would change under the draft measure?

The draft legislation would add a withholding provision for informant rewards paid by HMRC. When HMRC pays a reward under the Strengthened Reward Scheme, HMRC would deduct a sum representing Income Tax at the additional rate in force for the tax year of payment.

The policy paper describes the proposed start as on and after Royal Assent to Finance Bill 2026–27. That means the published 45% mechanism should not be treated as operative merely because the draft legislation exists. Check Royal Assent, the enacted wording and any commencement provision before relying on it.

The proposed withholding is designed to simplify collection. It does not change the underlying principle that the reward is taxable income, and it does not guarantee that 45% is the recipient's final effective tax liability.

Reward percentage versus tax percentage

These two percentages answer different questions:

For example, a reward calculated as 20% of tax collected is not automatically taxed at 20%. Conversely, a 45% deduction from a payment does not mean that 45% of the reward is necessarily the final amount due in every personal tax position.

Who can receive a reward?

The published scheme is for individuals. The policy paper says informant rewards can only be paid to individuals. A company cannot assume that it can receive the reward or apply the proposed withholding rule to an ordinary corporate receipt.

The underlying information must help HMRC recover tax from serious avoidance or evasion. The published guidance states that rewards may be available where the information leads to collection of at least £1.5 million of tax. HMRC's evaluation of the information, investigation and collection outcome remains central.

The scheme is separate from:

• an employee reporting a workplace issue;
• a professional adviser making a disclosure under a regulatory duty;
• a tax refund or repayment claim;
• a whistleblowing payment under another public body; and
• income earned for providing tax or investigation services.

Do not describe an ordinary report as qualifying for the Strengthened Reward Scheme without checking the official eligibility guidance.

What records should a recipient keep?

Keep a file containing:

1. the report or submission reference;
2. HMRC's correspondence confirming the scheme and award;
3. the date and gross amount of the reward;
4. any statement showing tax withheld;
5. the calculation or notice explaining the reward percentage;
6. related expenses and professional advice records; and
7. the Self Assessment return and payment or repayment evidence.

The gross amount and tax withheld should be reconciled to the information included in the tax return or other HMRC record. Do not report only the net bank receipt if the documents show a different gross reward and tax deduction.

How to think about the Self Assessment position

The withholding proposal does not remove the need to consider whether the recipient must file a return. The correct route depends on the person's wider income, registration status and the classification of the reward.

If the reward is treated as miscellaneous income, it may sit alongside other non-PAYE income. If the reward is received in the course of a trade, the trading-receipt treatment may affect the calculation. Other income, reliefs, payments on account and tax already withheld can change the final amount.

Use the official HMRC documents and award correspondence when completing a return. Do not use the 45% proposed deduction as a substitute for checking the full return.

Current law and proposal at a glance

Frequently Asked Questions

Evidence and decision checks

A reliable strengthened reward scheme tax uk 2026 27 review starts by fixing the tax year and the date on which the relevant event happened. Record the person's or business's status, the income or transaction category, the amount before tax, tax already withheld, and any election or claim being relied on. Do not combine a headline figure with a final liability: the result can change when another income source, a payment date, an ownership interest or a qualifying condition is added.

Keep the source documents behind every important input. Depending on the subject, that may include payslips, invoices, bank statements, contracts, provider statements, travel records, HMRC notices, payroll submissions, valuations or correspondence. Where an amount is apportioned, write down the method and retain the underlying total. If a correction is made, preserve the original figure and explain the reason, date and evidence for the replacement.

Before relying on the result, check the current official guidance for the same tax year and jurisdiction. Distinguish enacted law from a consultation, draft measure, announcement or future proposal, and record the effective date. Reconcile the final estimate to the relevant return, payroll record or HMRC account. A calculator or explanatory guide can support a decision, but it cannot replace the eligibility test or the official filing and payment process.

Evidence and decision checks

A reliable strengthened reward scheme tax uk 2026 27 review starts by fixing the tax year and the date on which the relevant event happened. Record the person's or business's status, the income or transaction category, the amount before tax, tax already withheld, and any election or claim being relied on. Do not combine a headline figure with a final liability: the result can change when another income source, a payment date, an ownership interest or a qualifying condition is added.

Keep the source documents behind every important input. Depending on the subject, that may include payslips, invoices, bank statements, contracts, provider statements, travel records, HMRC notices, payroll submissions, valuations or correspondence. Where an amount is apportioned, write down the method and retain the underlying total. If a correction is made, preserve the original figure and explain the reason, date and evidence for the replacement.

Before relying on the result, check the current official guidance for the same tax year and jurisdiction. Distinguish enacted law from a consultation, draft measure, announcement or future proposal, and record the effective date. Reconcile the final estimate to the relevant return, payroll record or HMRC account. A calculator or explanatory guide can support a decision, but it cannot replace the eligibility test or the official filing and payment process.

Check the official Strengthened Reward Scheme guidance and the Finance Bill withholding proposal before relying on the payment or tax treatment. The proposal may change before Royal Assent.

Official sources

• HMRC — Withholding of Income Tax for Strengthened Reward Scheme rewards
• HMRC — Strengthened Reward Scheme guidance
• HMRC — Draft legislation for informant rewards
• HM Treasury — Budget 2025 overview of tax legislation and rates