UK hybrid mismatch rules (TIOPA 2010 Part 6A): connection tests—control group, related persons, payer-as-payee—and structured arrangements; acting together attribution, 25%/50% thresholds and FA 2021 changes
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The UK’s rules on hybrid and other mismatches
Since 1 January 2017, the UK’s hybrid and other mismatch rules (described in this Practice Note as the hybrid rules) have been in force, designed to neutralise tax mismatches arising from how a hybrid instrument or hybrid entity is treated for tax. Although the hybrid rules typically apply to cross-border dealings involving two or more jurisdictions, they can also apply to transactions that are entirely UK domestic.
They specifically address:
- deduction/non-inclusion mismatches (D/NI mismatches), i.e. where a payment under a hybrid mismatch arrangement is deductible in the payer jurisdiction for tax purposes but is not included in the taxable income of a payee or a related party investor; and
- double deduction cases (DD cases), i.e. where a payment under a hybrid mismatch arrangement gives rise to more than one tax deduction.
For more detail on the hybrid rules, see Practice Note: Hybrid mismatches—introduction to the rules. For an overview in table form of the conditions required by each chapter before any counteraction can apply, see: UK rules counteracting hybrid mismatch arrangements—table.
Subject to exemptions, the hybrid rules seek to counteract these tax mismatches by denying the tax deduction or by treating the receipt...
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Web page updated on 22/05/2026
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