Over the past year, the United Kingdom has introduced a series of relevant fiscal reforms through different financial laws, with the aim of aligning with international standards, encouraging investment and adapting to the new post-Brexit environment.

One of the main developments is the implementation of the standard on untaxed benefits (UTPR), which is part of the framework of the Second Pillar of the OECD. This measure complements other existing rules, such as the multinational supplementary tax (MTT) and the national minimum tax (DMTT), applicable since the end of 2023. In addition, the rules on extraterritorial income from intangible assets (ORIP), now considered less effective in the face of multinational tax planning, were repealed.

In the energy field, the new Energy Security Investment Mechanism (ESIM) was introduced, which directly affects the tax on oil and gas profits. For its part, the tonnage tax was expanded to include new companies in the maritime sector, together with an increase in the tax relief limits applicable to this regime.

In the area of innovation, an improved R&D support regime for companies at a loss (ERIS) was launched, requiring that at least 30% of the group's total expenditure be allocated to research and development activities. In turn, a merged R&D regime was established with new rules on outsourcing and costs abroad, in force since April 2024.

The total relief of 100% in the first year for capital expenditures on facilities and machinery was also made permanent, while investments in electric vehicles and charging points will continue to benefit from tax incentives until 2026.

Regarding transfer pricing, British entities that are part of multinational groups with revenues exceeding 750 million euros must maintain detailed documentation in accordance with OECD guidelines, including a Master Archive and a Local Archive. In parallel, country-by-country (CbC) notification obligations were simplified for many groups, reducing the administrative burden, although certain situations still require specific reporting.

Finally, as of April 1, 2024, the mandatory registration threshold for VAT in the UK increased from 85,000 to 90,000 pounds, reducing the administrative burden for many small businesses. And as part of the regulatory dissociation process after Brexit, the EU Legislation Reform Act was enacted, which guarantees the continuity of the legal framework in the area of VAT, excise duties and customs, preserving key principles of community law prior to 2021.

Consultations and proposals - in progress

Among the most relevant proposals are measures already announced or included in legislative projects, and others that are still in the public consultation phase.

Measures focused on internal affairs

In recent years, the United Kingdom has introduced a series of tax reforms aimed at modernizing its tax system, combating tax evasion and adapting to new economic challenges. Some of these measures focus on strengthening anti-circumvention regulations and improving collection, sanction and compliance mechanisms. Important revisions have also been undertaken, such as the simplification of the capital gains tax, although there are still no definitive decisions on its implementation.

With regard to international taxation, the United Kingdom has adopted the OECD model for mandatory disclosure rules, replacing the previous EU-derived regime. The new framework took effect on March 28, 2023, establishing clearer requirements aligned with international standards.

The Government has also made progress in creating a new investment vehicle: the Reserved Investor Fund (RIF), designed to facilitate specialized investments, especially in the real estate sector. Although the project is on hold due to the July 2024 elections, it is expected to continue under the new government.

Among other initiatives, work is being done on the modernization of the stamp duty on stocks, considered obsolete, as well as on a revision of the tax regime for the oil and gas sector. In this area, changes have been proposed, such as increasing the energy benefit tax (EPL) to 38% starting in November 2024 and extending it to 2030.

With a view to sustainability, the United Kingdom plans to introduce a Carbon Border Adjustment Mechanism in 2027, which will apply a carbon price to certain imported industrial products. The objective is to avoid the relocation of emissions and to reinforce the country's commitment to climate neutrality by 2050.

On the other hand, tax guidelines have been updated regarding capital asset deductions, especially with regard to facilities, machinery and costs prior to the development of large projects. A recent court ruling has expanded the interpretation of deductible expenses, although a possible appeal is pending.

In the field of R&D, a consultation has been opened to expand the use of prior authorizations and to facilitate adaptation to the new merged regime. A process has also been proposed to provide greater early tax security to large investment projects.

In February 2025, the Government launched a consultation on the implementation of mandatory electronic invoicing, currently voluntary. This measure seeks to modernize tax administration and improve compliance.

Finally, in the Autumn Budget of 2024, the Government presented a road map for corporate tax, in which it undertakes to keep the main rate at 25% throughout the legislature. In addition, it reiterates its support for the international agreement on the first pillar of the OECD and its intention to eliminate the British tax on digital services once said agreement enters into force.

Measures focused on international issues

Corporate redomiciliation

After a public consultation, in April 2022, the Government of the United Kingdom announced its intention to establish a redomiciliation regime that would allow companies incorporated outside the country to transfer their domicile to the United Kingdom, while retaining their original legal personality. To this end, a panel of experts was formed to evaluate the available options and advise on the best way to implement this regulatory framework.

The panel published its report on October 14, 2024, which analyzes the potential functioning of the regime and strongly supports the creation of a bidirectional system. This would allow both the redomiciliation of foreign companies to the United Kingdom and the departure of British companies to other jurisdictions. Although the report includes detailed proposals, it is recommended that further consultations be carried out once the Government defines the key characteristics of the regime. This consultation is expected to take place at an appropriate time.

Transfer pricing and new documentation obligations

As part of implementing new transfer pricing documentation requirements, HMRC decided not to move forward, for now, with the Summary Audit Record (SAT). However, current legislation authorizes its possible introduction in the future. Although a public consultation on this topic was initially planned, this has been postponed due to other priority areas. More information in this regard can be found in the “Transfer Pricing Documentation” section under “Group Taxes”.

On April 28, 2025, after an initial consultation in the summer of 2023 and an update in the fall of 2024, the Government published a new consultation on a bill to reform the regulatory framework for transfer pricing, permanent establishment and the Deviated Income Tax. These issues are addressed in the “Group Taxes”, “Corporate Residence” and “Corporate Income Tax” sections, respectively. This initiative is part of the Government's Corporate Tax Roadmap, which aims to modernize and simplify the tax system in accordance with international standards and in line with the opinions of interested parties. The consultation will remain open until July 7, 2025, after which the responses received will be analyzed in order to incorporate them into the drafting of the Finance Bill 2025-26. The regulations are expected to come into force in 2026.

Additional transfer pricing inquiries

A second consultation has begun on two additional proposals on transfer pricing, set out in the Spring Declaration of March 2025:

Review of the exemption for SMEs: It is proposed to modify the current exemption from transfer pricing rules to include medium-sized companies, thus extending the scope of application of those rules. This aspect is addressed in the “Transfer Pricing and Undercapitalization” section under “Group Taxes”.

ICTS Form (List of International Controlled Transactions): There is a new tax compliance requirement for all multinationals subject to transfer pricing rules, requiring them to report cross-border transactions between related parties to HMRC, even if they do not submit country-by-country reports. This measure is discussed both in “Transfer Pricing and Undercapitalization” and in “Transfer Pricing Documentation”.

The consultation will be open until July 7, 2025, and the responses will be used to evaluate the potential costs and benefits of these proposals. If considered appropriate, the Government will work to implement them in future tax legislation.

Review of Cost Contribution Agreements (CCA)

HMRC has completed its review of Cost Contribution Agreements, as a result of which it has published a new Statement of Practices and a model Advance Price Agreement applicable to certain aspects of CCAs. In addition, an FAQ document has been published to provide greater clarity.

In particular, an option is introduced for companies to obtain a quick validation of their participation in a CCA through a unilateral APA, thus offering greater legal certainty. This measure does not directly address the pricing of contributions to the CCA, although taxpayers can expand the APA through a bilateral agreement to include this aspect.