HM Treasury has made the Post Office Capture Redress Scheme (Tax Exemptions and Relief) Regulations 2025 (SI 2025/1130) under Schedule 15 to the Finance Act 2020, as amended by the Finance Act 2024. The instrument was made on 28 October 2025, laid before the House of Commons on 29 October 2025, and comes into force on 20 November 2025.
The regulations provide exemptions from income tax, corporation tax and capital gains tax, alongside a relief from inheritance tax, for compensation paid under the Post Office Capture Redress Scheme. The scheme, announced by the Government on 19 June 2025, is administered by the Department for Business and Trade, and covers those adversely affected by the Post Office Limited accounting system known as Capture or the Capture Accounting System.
For income tax and corporation tax, compensation paid to an eligible person or to a “nominated individual” is treated as a qualifying payment under Part 1 of Schedule 15. In practical terms, no income tax or corporation tax charge arises on such receipts where the payment is made on or after 27 October 2025.
For capital gains tax, the same compensation is treated as a qualifying payment under Part 1 so that any charge that might otherwise arise is disapplied. This treatment applies to disposals made on or after 27 October 2025.
Inheritance tax relief is provided in relation to compensation connected with deaths occurring on or after 27 October 2025, by reference to the provisions in Part 1 of Schedule 15. This ensures estates are not disadvantaged by the timing of compensation within the period specified by the regulations.
The instrument also designates these as “relevant compensation payments” for the purposes of Part 2 of Schedule 15. This activates rules under which certain onward payments by companies are exempt from income tax and capital gains tax. The provisions apply to onward payments received, and to disposals linked to such payments, on or after 27 October 2025.
Eligibility extends to individuals adversely affected by the Capture system and to “nominated individuals”, defined as former shareholders, directors or partners of entities that have since ceased to exist but would have qualified for compensation. The term “Post Office Limited” follows the definition set out in Part 2 of Schedule 15.
Two dates matter operationally. Although the regulations commence on 20 November 2025, exemptions and reliefs take effect retrospectively for payments received, disposals made and deaths occurring on or after 27 October 2025. HM Treasury indicates that a Tax Information and Impact Note will be published on GOV.UK to set out fiscal and administrative impacts.
For accounting purposes, payments from the Department for Business and Trade under the scheme should be recognised as non-taxable for income tax and corporation tax. Companies passing on compensation should record the scheme basis for any onward payment to ensure exemption under Part 2 of Schedule 15. Maintaining evidence of payment dates will be important for 2025 to 2026 returns and for capital gains computations connected to any disposals after 27 October 2025.
The regulations are signed by Lords Commissioners Christian Wakeford and Stephen Morgan for HM Treasury. The measure provides statutory clarity on the tax treatment of the Post Office Capture Redress Scheme and ensures immediate protection for recent payments while setting a formal commencement date.