Taxation (UK) · Principal sources of revenue law and practice

Sources of UK Tax Law: Statute and Case Law

Updated 11 October 2026 · Fact-checked

UK tax law comes mainly from statute: Acts of Parliament such as the annual Finance Act, plus statutory instruments made under those Acts. Courts then interpret the wording, and their decisions form case law that lower courts follow as precedent. HMRC practice sits beside the law but is not law.

Understand Sources of UK Tax Law: Statute and Case Law

Tax can only be charged if the law says so. In the UK that law has two main sources: statute and case law. You need to know what each is, who makes it and how they fit together.

Statute is law made by Parliament. Each year a Finance Act is passed after the Budget. It changes rates, reliefs and rules, and it adds to earlier tax Acts. For TX-UK, ACCA examines the Finance Act 2025 for exams from 1 June 2026 to 31 March 2027 and in June 2027. That Act received Royal Assent on 20 March 2025.

Statutory instruments (SIs) are rules made by ministers or HMRC under power given by an Act. They fill in detail and can be made faster than a new Act. They are still law. ACCA applies the same rule to them as to Acts: where a provision only takes effect at a future date, it is not normally examined until it actually takes effect. The same applies to the effective date of provisions introduced by statutory instrument.

Case law comes from decisions of the courts and tribunals when taxpayers and HMRC disagree about what the statute means. Statute is often unclear or does not cover a new situation, so judges decide how the words apply. Under precedent, a decision of a higher court binds the lower courts on the same point. Decisions of the same level or a lower court are persuasive only. Parliament can change the result by passing new legislation.

HMRC also publishes manuals, statements and guidance. These show how HMRC will apply the law, but they are not a source of law and a court is not bound by them. At TX-UK, you mainly need to name the sources, say who creates them, and explain how precedent works in simple terms.

Key rules to remember

Statute: Act of Parliament (e.g. Finance Act 2025) = primary legislation; Made by Parliament. The Finance Act examined for exams from 1 June 2026 to 31 March 2027 and June 2027 is the Finance Act 2025.
Statutory instrument: SI = secondary legislation made under power in an Act; Gives detail and has legal force. It cannot go beyond the power the Act gives.
Case law and precedent: Higher court decision → binds lower courts on the same point; Same-level or lower-court decisions are persuasive only. The Supreme Court is at the top of the usual appeal route.
HMRC practice: HMRC manuals and guidance ≠ law; They show HMRC's view. Courts are not bound by them.
Examinable cut-off: Prospective legislation is not normally examined until it takes effect; Applies to provisions in a Finance Act and to those introduced by statutory instrument.

How to solve Sources of UK Tax Law: Statute and Case Law questions

Use this method for any question on sources of tax law, whether objective or written.

1Read the command word. 'Identify' needs a list. 'Explain' needs a reason or a link.
2Split the answer into statute, statutory instruments, case law and HMRC practice.
3For each source, state who creates it and give one example, such as the Finance Act.
4If precedent is asked, say which court binds which. Higher binds lower; equal or lower is only persuasive.
5Say whether HMRC guidance is law. It is not. It shows HMRC's view.
6For a scenario, link the facts: is the wording unclear? Is there a court decision on the point? Has new legislation changed it?
7Check dates. Only legislation that has taken effect and falls within the Finance Act examined counts.

Quickest way: Four-source check

When to use it: Use it for objective questions where you must pick which source is law or who makes it.

Ask: who made it? Parliament means statute.
Ask: was it made under power given by an Act? Then it is a statutory instrument.
Ask: was it a court decision? Then it is case law and precedent applies.
Ask: is it HMRC explaining its view? Then it is practice, not law.
Discard options that say HMRC guidance binds the courts.

Common mistakes in Sources of UK Tax Law: Statute and Case Law

Treating HMRC manuals or statements as law.
HMRC publishes them with authority and students follow them daily.
Fix: Remember they show HMRC's view only. Law is statute and case law.
Saying statutory instruments are not real law.
They are made by ministers, not debated like an Act.
Fix: They are secondary legislation and have legal force, within the power the Act gives.
Thinking every court decision binds every court.
Students blur binding and persuasive authority.
Fix: A higher court binds lower courts on the same point. Same-level or lower decisions persuade only.
Assuming judges overrule statute.
Students see court decisions changing outcomes.
Fix: Courts interpret statute. Parliament can reverse a decision by passing new law.
Using a Finance Act that is not the one examined.
Students read old notes or news of future changes.
Fix: Use the Finance Act 2025 for the June 2026 to June 2027 sittings, and ignore provisions not yet in effect.

Worked examples

Example 1

A new rule is set out in detail in regulations made by a minister under power given in the Finance Act. (a) What type of source is this? (b) Does it have legal force?

Show the solution

The regulations were made by a minister, not passed as an Act itself.
They were made under power given by an Act.
That makes them a statutory instrument, which is secondary legislation.
Secondary legislation made within its power has legal force.

Answer: (a) A statutory instrument (secondary legislation). (b) Yes, it has legal force, provided it stays within the power the Act gives.

Example 2

A lower tribunal has decided a tax dispute one way. A higher court has earlier decided the same point the other way. (a) Which decision must the tribunal follow? (b) HMRC guidance also supports the tribunal's view. Does that change your answer?

Show the solution

Precedent: a higher court's decision binds lower courts on the same point.
The tribunal is lower than the higher court, so it must follow that earlier decision.
HMRC guidance is not law and does not bind the courts.
So it cannot override the higher court's decision.

Answer: (a) The tribunal must follow the higher court's earlier decision. (b) No. HMRC guidance shows HMRC's view but is not law, so the answer is unchanged.

Exam tips

In objective questions, look for the word 'binding'. Only statute, valid statutory instruments and higher-court precedent bind.
In written answers, give one example per source, such as the Finance Act 2025.
Remember the examined cut-off: legislation not yet in effect is not normally tested.
Do not cite case names or section numbers unless you are certain. Explaining the principle earns the marks.
Keep answers short. List the source, who makes it, and its status.

Practice questions from Principal sources of revenue law and practice

Sources of UK Tax Law: Statute and Case Law in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Sources of UK Tax Law: Statute and Case Law: frequently asked questions

What are the main sources of UK tax law?

They are statute (Acts of Parliament such as the Finance Act), statutory instruments made under those Acts, and case law from court decisions. HMRC practice is a guide to how the law is applied, not a source of law.

Which Finance Act does TX-UK examine?

For exams from 1 June 2026 to 31 March 2027 and in June 2027, ACCA examines the Finance Act 2025. It received Royal Assent on 20 March 2025.

How does case law affect UK tax law?

Courts decide what unclear statute means. Their decisions bind lower courts on the same point through precedent. Parliament can later change the result by passing new legislation.

Is HMRC guidance part of tax law?

No. HMRC manuals and statements show how HMRC will apply the law. Courts are not bound by them, so they cannot override statute or case law.