United Kingdom

Budget, Consultations, and Autumn Statement

The United Kingdom (UK) Chancellor delivered her Autumn Budget on 26 November 2025, and Finance Bill 2025-26 was subsequently published and progressing through Parliament towards enactment.

Changes that have taken effect in the past year

Reforms that took effect in the past year include:

• On 4 July 2023, His Majesty’s (HM) Treasury made the Taxes (Base Erosion and Profit Shifting) (Country-by-Country Reporting) (Amendment) Regulations 2023 (SI 2023/752), and this was laid before Parliament on 5 July 2023. The effect of these changes is broadly the removal of the annual year-end CbC reporting notification obligations in the United Kingdom for many MNE groups, albeit there still remain some specific scenarios where a UK notification may still be required (e.g. where a surrogate of the MNE group is filing a CbC report [e.g. to avail itself of Exception B under the legislation]). 
• The value-added tax (VAT) registration threshold has increased from 85,000 to 90,000 pounds sterling (GBP), effective from 1 April 2024.
• Following the United Kingdom’s departure from the European Union (EU), the Retained EU Law (Revocation and Reform) Act was enacted in 2023. This act makes provision for significant changes to the status and operation of retained European law. In order to prevent the repeal of several EU derived UK VAT and excise provisions as a result of this act, Finance Act 2024 included specific provisions for retained EU law relating to VAT, excise, and customs duty. As a consequence, UK VAT and excise law that was in force prior to 1 January 2021 (EU exit day) will continue to be interpreted in line with EU law principles.

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.
• As part of the 2025 Budget announcements there are proposed changes to capital allowances. These include:
  • A new First Year Allowance - A new 40% FYA will apply for expenditure incurred from January 2026. This will apply to main pool qualifying expenditure, including expenditure that would otherwise qualify for full expensing; however, additionally expenditure on assets used for leasing will be eligible for this first-year allowance along with qualifying expenditure incurred by unincorporated businesses. This should provide additional relief for assets which would otherwise have received relief at 18% (reducing to 14% from 1 April 2026).
  • Writing down allowances (WDAs) - A reduction to the writing down allowance (WDA) main rate from 18 to 14 per cent will come 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 will be applied (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 will be extended for a further 12 months, to 31 March 2027 for Corporation Tax purposes and 5 April 2027 for Income Tax purposes.
• On 27 April 2023, 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 government expecting to include it within the Finance Bill 2026 and 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 UK from 1 January 2027, and that 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 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 £50,000 in CBAM goods over a twelve-month period will apply. Importers of in-scope tariff classifications 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.
• 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 LRR 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 R&D reliefs was launched in early 2025, and the response was published on 26 November 2026 . A targeted research and development (R&D) advance assurance service will be piloted from Spring 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 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 £1 billion or more over their lifetime. This can include both capital and revenue expenditure (excluding debt finance, goodwill, and share acquisitions). HMRC will be publishing technical guidance alongside the Finance Bill.
• 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.   
• In the Autumn Budget 2024, the government published a Corporate Tax Roadmap, which aims to provide predictability, stability, and certainty to businesses and investors. Its key features include capping the main rate of corporation tax at 25% for the duration of the Parliament whilst ensuring that the UK’s regime remains competitive. The small profits rate and marginal relief will be maintained at their current rates and thresholds. The Roadmap also reiterates the government’s continuing support for the international agreement on a multilateral solution under Pillar One and its commitment to repeal the UK’s digital services tax (DST) when that solution is in place.

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 report suggests how various components of the regime could work and, most notably, strongly supports the introduction of a two-way re-domiciliation regime to allow UK companies to re-domicile outside the United Kingdom as well as those registered outside the United Kingdom to become a UK company. Whilst the panel has made quite detailed proposals, it recommended that there should be further consultation once the government has decided on more detailed proposals. The government intends to consult in due course on a proposed regime design.
• 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. A public consultation on this requirement was expected to take place; however, given the areas of further consultation (see below), this is now not expected in the near future. This is discussed in Transfer pricing documentation in the Group taxation section.
  • In the Autumn budget 2025, the UK Government announced the reform of UK law in relation to transfer pricing, permanent establishments and Diverted Profits Tax in response to the consultation on these pieces of legislation which closed in July 2025. The following changes, which will take 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 TP and market value for other transactions;
  • Removal of the requirement for a commissioners’ sanction for TP determinations;
  • Updates to the participation condition;
  • Introduction of an exemption for UK‑to‑UK transaction where no tax loss risk;
  • Clarification of the OECD materials as interpretative aids; and
  • Overhaul of financial transactions (recognising implicit support, election mechanics for guarantees, aggregation of equity holding lenders, and FX/derivatives treatment). This will include grandfathering provisions for existing loans for a period of 2 years to allow time for business to update arrangements where needed.

  Permanent establishment:

  • Alignment of the UK PE definition and attribution rules with the 2017 OECD Model;
  • Updating 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); and
  • Introduction of a new mechanism that allows PEs to claim relief where a TP adjustment is made to a connected UK company.

  DPT repealed and replaced: DPT is 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 MAP under the CT regime. There have been changes to the gateway tests, so previous DPT analyses will need to be revisited.

• A second consultation has been initiated on two further transfer pricing related proposals, which were trailed as part of the Spring Statement in March 2025. The first would amend the existing exemption from the TP rules for small and medium enterprises (SMEs), broadly bringing medium-sized enterprises into TP rules. This is discussed in Transfer pricing and thin capitalisation in the Group taxation section. The second is a new tax compliance requirement requiring all multinationals within the TP 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 discussed in Transfer pricing and thin capitalisation and in Transfer pricing documentation in the Group taxation section. The consultation will run until 7 July 2025, after which the government will analyse the responses and publish its response. This will address the government’s findings regarding potential benefits and costs arising from the potential new measures. If the government concludes that there is merit in introducing either or both of these changes, then officials will work towards implementation at a future fiscal event.
• It is proposed in Finance (No.2) Bill 2025-26 that the rate of withholding tax 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% (currently 20%) from 6 April 2027. 
• 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 this 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.