Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Transfer pricing definition

What does Transfer pricing mean? Transfer pricing describes the pricing and terms of transactions between connected companies or related persons, and the adjustments needed so taxable profits reflect an arm’s length result. In practice it covers intra-group supplies of goods and services, royalties and other intellectual property charges, financial transactions (loans and guarantees) and cost allocations. In the UK, the arm’s length principle is enacted in Part 4 of the Taxation (International and Other Provisions) Act 2010 and applied by HMRC consistently with the OECD Transfer Pricing Guidelines. In Ireland, materially similar rules are set out in Part 35A of the Taxes Consolidation Act...

UK transfer pricing and joint ventures: scope, participation condition (40% and 'acted together'), financing and thin capitalisation, arm's length adjustments, compensating adjustments, documentation and APAs, forthcoming legislative changes

Published by a LexisNexis Tax expert

Practice notes

FORTHCOMING CHANGE relating to UK Transfer pricing legislation:

On 29 April 2025, the UK government released draft legislation for technical consultation setting out a series of proposed revisions to the UK transfer pricing framework, together with related amendments to the Rules on permanent establishment and the diverted profits tax. Headline measures include:

the withdrawal of UK-to-UK transfer pricing, save for targeted exceptions designed to deter tax arbitrage;
changes to the participation condition; and
a range of updates to provisions that regulate financial transactions.

The draft text follows the Conservative government’s initial policy consultation on reform launched in 2023, and the Labour government’s Autumn Budget 2024 announcement of further consultations. A further consultation, also launched on 29 April 2025, proposes limiting the current SME exemption to small enterprises only, and introducing a new filing obligation for multinationals that fall within scope. At Autumn Budget 2024 the government indicated it would review the transfer pricing treatment of cost contribution arrangements, under which group companies share both the costs and the benefits of developing intellectual property; however, no additional steps on this topic were announced on 29 April 2025...

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Web page updated on 22/05/2026

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