UK Pillar Two (MTT/DTT): corporate transaction treatment—acquisitions/disposals, reorganisations, intra-group transfers, asset rebasing, deferred tax and anti-forestalling; HMRC manual and Finance Act 2026/2025 updates

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Practice notes

STOP PRESS relating to new MTT and DTT draft legislation :

Section 50 and Schedule 8 of the Finance Act 2026 significantly reshape several elements of the MTT and DTT rules. Among the updates and clarifications, in particular, the draft rules expressly embed the OECD’s Administrative Guidance (January 2025), narrowing the extent to which pre-entry deferred tax assets and liabilities, arising from government‑granted tax reliefs, may properly be recognised when calculating or assessing a group member’s effective tax rate. That particular component is treated as commencing for accounting periods ending on or after 21 July 2025. Most of the other measures will apply to accounting periods beginning on or after 31 December 2025, although certain provisions may, at the taxpayer’s election, be adopted earlier by impacted taxpayers. For additional detail, see: News Analysis: Budget 2025—Tax analysis—International.

STOP PRESS relating to new HMRC manual on MTT and DTT :

On 5 August 2025, HMRC issued a new MTT and DTT manual. The manual draws on earlier published tranches of draft guidance circulated for public consultation in September 2024 and January 2025, which have been revised to reflect stakeholder feedback and comments received during the consultation process. The principal differences between the previously released...

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Web page updated on 22/05/2026

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