United Kingdom

Budget, Consultations, and Autumn Statement

The United Kingdom (UK) Chancellor delivered her Autumn Budget on 26 November 2025, and Finance Act 2026 (FA 2026) was subsequently enacted by Parliament on 18 March 2026.

Changes that have taken effect in the past year

Reforms that took effect in the past year include:

Reforms that took effect in the past year include: 

• In the Autumn Budget 2025, the UK government announced the reform of UK law in relation to transfer pricing, permanent establishments (PEs), and Diverted Profits Tax (DPT) in response to the consultation on these pieces of legislation, which closed in July 2025. The following changes, which took effect for periods beginning on or after 1 January 2026, are included within the legislation in line with the previous summer consultation: 

• • Transfer pricing simplification and alignment: 

• • • A single valuation standard for intangibles – Use of arm’s-length standard for transactions subject to transfer pricing and market value for other transactions. 

• • • Removal of the requirement for a commissioners’ sanction for transfer pricing determinations. 

• • • Updates to the participation condition. 

• • • Introduction of an exemption for UK‑to‑UK transactions where there is no tax loss risk. 

• • • Clarification of the Organisation for Economic Co-operation and Development (OECD) materials as interpretative aids. 

• • • Overhaul of financial transactions (recognising implicit support, election mechanics for guarantees, aggregation of equity holding lenders, and FX/derivatives treatment). This included grandfathering provisions for existing loans for a period of two years to allow time for business to update arrangements where needed. 

• • Permanent establishment (PE): 

• • • Alignment of the UK PE definition and attribution rules with the 2017 OECD Model. 
    • Update of the Investment Manager Exemption (safe harbour approach, broader scope for including advisors in addition to managers, removal of the 20% rule and the redundant charge). 
    • Introduction of a new mechanism that allows PEs to claim relief where a transfer pricing adjustment is made to a connected UK company. 
  • DPT repealed and replaced - DPT has been repealed and replaced with a simpler corporation tax charge on Unassessed Transfer Pricing Profits (UTPP), retaining a streamlined notice system and two gateway tests, with access to treaty benefits and Mutual Agreement Procedure (MAP) under the corporate tax regime. There have been changes to the gateway tests, so previous DPT analyses will need to be revisited.
• HMRC has been undertaking a review on Cost Contribution Arrangement (CCAs) and has now concluded the review. As a result, HMRC has released a new Statement of Practice (SOP) and template Advance Pricing Agreement (APA) terms for certain aspects of CCAs, alongside a Q&A document providing further details. Specifically, the measures seek to provide a new option for businesses to quickly gain clearance through the form of a unilateral APA that a UK entity's participation in a CCA is valid. This has been an area of increased HMRC scrutiny, and this new measure is seen as a means to provide quicker certainty to businesses on this point. The new mechanism does not cover the wider question of the pricing of contributions to the CCA, but taxpayers can elect to expand the APA to cover such measures on a bilateral basis. 
• The rate of withholding tax (WHT) on UK interest, rents to non-resident landlords, and Property Income Distributions (PIDs) from a Real Estate Investment Trust (REIT) or Property Authorised Investment Fund (PAIF) will increase to 22% (up from 20%) from April 2027.  This change, first proposed in the Autumn Budget 2025, was enacted in FA2026. 
• A temporary 5% VAT rate applies from 25 June to 1 September 2026 to children’s meals and family-friendly admissions. It affects restaurants, cafés, cinemas, theatres, attractions, museums and advisers serving families with children during the school summer holidays, replacing the standard 20% VAT rate. 

• In the Autumn Budget 2025, the government clarified the rules on cross-border VAT grouping by reverting to the UK's previous whole-entity approach from 26 November 2025. The UK now applies an unconditional whole-entity approach: an overseas establishment of a business in a UK VAT group is treated as part of that UK VAT group, even where the EU country does not use whole-entity grouping. 

• Electronic Invoicing: Autumn Budget 2025 announced that the government will require VAT invoices to be issued in a specified electronic format from April 2029, with an implementation roadmap to be published at Budget 2026. It also announced investment in real-time digital prompts for VAT filing software from April 2027. 

• As part of the 2025 Budget announcements, there were  changes to capital allowances. These include: 

• • A new first-year allowance (FYA) - A new 40% FYA  applies for expenditure incurred from January 2026. This applies to main pool qualifying expenditure, including expenditure that would otherwise qualify for full expensing; however, additionally expenditure on assets used for leasing is eligible for this FYA along with qualifying expenditure incurred by unincorporated businesses. This should provide additional relief for assets that would otherwise have received relief at 18% (reducing to 14% from 1 April 2026). 

• • Writing down allowances (WDAs) - A reduction to the WDA main rate from 18% to 14% came into force from April 2026. This measure changes the capital allowance rates, for both corporation tax paying companies and unincorporated businesses, in respect of expenditure that does not claim full expensing. For accounting periods that span this date, a hybrid WDA rate  applies (based on the number of days before and after 1 April 2026). 

• • FYA for zero-emission cars and for electric vehicle charge points - These provisions have been extended for a further 12 months, to 31 March 2027 for corporation tax purposes and 5 April 2027 for income tax purposes. 

• Land remediation relief provides a 150% tax deduction for companies remediating and making safe previously contaminated or derelict land (where various conditions are met). A consultation was published to review the effectiveness of Land Remediation Relief in October 2025. No changes to land remediation relief were announced as part of the Budget. However, it has been confirmed that it will continue to be reviewed and there is an intention to publish a summary of responses in due course. 

• A consultation on widening the use of advance clearances in the research and development (R&D) reliefs was launched in early 2025, and the response was published on 26 November 2026. A targeted R&D advance assurance service is being piloted from May 2026. This enables small and medium-sized enterprises to gain clarity on key aspects of their R&D tax relief claims before submitting to HMRC. We are currently waiting on further details confirming the type of small and medium enterprises (SMEs) who may be eligible and what the key aspects are that claimants will be able to gain clarity on. 

• A consultation on providing advance tax certainty on major projects was launched in March 2025. The aim is to build a new process giving major investment projects increased tax certainty in advance. A response was issued on 26 November 2025. The new Advance Tax Certainty Facility will launch in July 2026, aimed at providing binding clarity on how tax rules will apply to major investment projects before material expenditure is incurred. The facility is designed to support confidence in large-scale, complex, or strategically important UK investments by offering early certainty across a broad range of taxes. To qualify, projects must involve new UK investment totalling GBP 1 billion or more over their lifetime. This can include both capital and revenue expenditure (excluding debt finance, goodwill, and share acquisitions). HMRC has  published technical guidance. 

Consultations and proposals - ongoing

The most significant proposals, which include announced proposals and those in draft legislation, and those subject to consultations include:

Measures focused on domestic matters

• A range of specific and narrow anti-avoidance rules.
• Further reforms regarding collection of taxes, application of penalties, and related issues focused on tax evasion.
• On 27 April 2023, HM Revenue and Customs (HMRC) published a consultation on ‘Stamp Taxes on Shares modernisation’. It is widely accepted that the current stamp taxes system is very outdated, and HMRC have set out their proposals for how the Stamp Taxes on Shares framework should be modernised. HMRC published the outcome of the consultation in April 2025, confirming their intention to legislate for a single tax on securities to replace stamp duty and Stamp Duty Reserve Tax, with the intention for this to be introduced in 2027. The new tax is expected to be called the Securities Transfer Charge.

• At the Autumn Budget in November 2025, the government announced details of the successor regime to the Energy Profits Levy (EPL): the Oil and Gas Pricing Mechanism (OGPM). The OGPM will be a revenue-based levy, taxing revenues earned above USD 90/bbl of oil or GBP 0.90/thm for gas. Unlike the Energy Security Investment Mechanism (ESIM), where lower oil and gas prices were both required for the mechanism to apply, it is intended that OGPM will be calculated on oil separately to gas. It is not clear how the threshold will be measured, i.e. based on actual transactions or an average calculation. The new mechanism will be subject to consultation during 2026, with the government expecting to include it within the Finance Bill 2026 and it to come into effect on 1 April 2030, or earlier if the ESIM is triggered.
• Separately, the government announced the intention to legislate for changes to the Decommissioning Relief Deed (DRD) to confirm their view that no payments can be made in relation to EPL.
• At Budget 2025, the government confirmed that it will legislate to introduce a Carbon Border Adjustment Mechanism (CBAM) in the United Kingdom from 1 January 2027 and published primary legislation in Finance Act 2026. Notably, the inclusion of indirect emissions will be delayed until 2029 at the earliest. This follows several rounds of consultation on the detailed policy design and implementation of CBAM.
• The CBAM regime, as expected, will apply a carbon price to specified imported goods to align their effective carbon cost with that borne by comparable domestic production under the UK Emissions Trading System (ETS), thereby mitigating the risk of carbon leakage. The initial scope covers aluminium, cement, fertilisers, hydrogen, iron, and steel.
• A de minimis threshold of GBP 50,000 in CBAM goods imported over a preceding 12-month period (backward looking test) or to be imported within the following 30-day period (forward looking test) will apply. Importers of in-scope goods must register with HMRC, submit quarterly returns detailing quantities and embedded emissions, and settle any CBAM liability. The inaugural reporting period runs to 31 December 2027, with payment due by 31 May 2028, after which standard quarterly cycles will apply.
• On 28 April 2025, the government opened a consultation proposing a new single duty on online gambling. Remote operators would no longer have to comply with up to three separate taxes.  
• On 28 April 2025, a news consultation was published on designing a VAT relief on goods donated to charities. 
• On 13 February 2025, the government released the long-awaited consultation on the adoption of mandatory electronic invoicing in the United Kingdom. Currently, electronic invoicing is optional, requiring recipient’s consent. The first HMRC notice about electronic invoicing was published in 2015 (700/63) and applies to suppliers of the National Health Service (NHS). The consultation ended on 7 May and is considered by many as the parlour of mandatory electronic invoicing in the United Kingdom. In the Autumn Budget 2025, the government announced it will require all VAT invoices to be issued in a specified electronic format from April 2029, with a stakeholder roadmap to be published at Budget 2026.
• The government announced a consultation on 10 March 2026 with a view to introducing a standardised format for Corporation Tax computations.  This particular consultation relates to the proposed timescales for introducing the changes however, HMRC are separately consulting on the design of the standardised format. 
• On 12 March 2026, a consultation was published in respect of a proposed extension to the Uncertain Tax Treatment regime.  The changes being proposed include widening the scope to include additional taxes (such as Stamp Duty Land Tax, National Insurance Contributions, Inheritance Tax and Capital Gains Tax) but would also require additional uncertainties to be reported where they may not be notifiable under the current rules.  This consultation closed on 4 June 2026 and further details are expected in due course. 
• On 19 March 2026, the government announced a consultation in respect of a proposed new requirement for close companies to report transactions between close companies and their participators to HMRC.  The consultation closed on 10 June 2026 and further details on this proposal are expected in due course. 

Measures focused on international matters

• Following a consultation, the UK government announced in April 2022 that it intends to introduce a re-domiciliation regime, which will make it possible for companies incorporated outside the United Kingdom to move their domicile to and relocate to the United Kingdom whilst retaining their legal personality. An expert panel was subsequently convened to explore the options and advise the government on how best to establish a UK corporate re-domiciliation framework, and the panel published its report on 14 October 2024. The Government then launched a consultation in March 2026 seeking views on the detailed design for this inward corporate re-domiciliation regime.  This latest consultation closed on 19 June 2026 and we await its output.
• Following the introduction of the new transfer pricing documentation requirements, HMRC decided not to implement the Summary Audit Trail (SAT), but the final regulations provide HMRC with the power to introduce such a requirement at a later date. Instead HMRC have pursued the International Controlled Transactions Schedule (ICTS). This is discussed in Transfer pricing documentation in the  Group taxation section. 
• In addition, following an initial consultation in 2025, a further consultation was issued in June 2026 for a new tax compliance requirement requiring all multinationals within the transfer pricing rules (not just those within CbC reporting) to report information on cross-border related party transactions to HMRC via a filing referred to as the International Controlled Transactions Schedule (ICTS) in the consultation. This is currently expected to come into effect for accounting periods beginning on or after 1 January 2027. This is discussed in Transfer pricing and thin capitalisation in the Group taxation section. 
• On 21 May 2026, the government published a policy paper detailing its intention to make the exemption for foreign permanent establishments (PEs) (which is currently elective) mandatory. For most companies this change will take effect for accounting periods beginning on or after 1 January 2027, but it will apply from 1 September 2026 for UK-resident companies that conduct activities in relation to oil and gas extraction and exploitation through foreign PEs. The mechanics of this exemption are detailed below in the Branch income section. Draft legislation related to this matter is expected to be released in Summer 2026.