UK hybrid D/NI mismatch rules for permanent establishments and multinational payees—TIOPA 2010 Part 6A chapters 6 and 8: conditions, scope, counteraction and dual inclusion income
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Practice notes
The UK’s rules on hybrid and other mismatches
The UK’s regime for hybrid and other mismatches (referred to in this Practice Note as the hybrid rules) has applied since 1 January 2017, aiming to neutralise tax outcomes that arise from how a hybrid instrument or hybrid entity is treated for tax. Although these rules generally concern cross‑border dealings across two or more jurisdictions, they can equally extend to transactions conducted entirely within the UK.
In essence, the hybrid rules address:
- deduction/non‑inclusion mismatches (D/NI mismatches), ie where a payment within a hybrid mismatch arrangement is deductible for tax in the payer jurisdiction but not brought into the taxable income of the recipient or a related party investor, and
- double deduction cases (DD cases), ie where a payment under a hybrid mismatch arrangement gives rise to more than one tax deduction
The hybrid rules consider various categories of D/NI mismatches and DD cases in separate chapters. In all instances, the applicable provisions only take effect when the relevant conditions are satisfied. For more on the hybrid rules, see Practice Note: Hybrid mismatches—introduction to the rules and UK rules counteracting hybrid mismatch arrangements—table. Subject to exemptions, the hybrid rules aim...
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Web page updated on 22/05/2026
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