Jurisdiction(s):
United Kingdom

UK transfer pricing overview: arm's length principle, OECD Guidelines and dispute risks, with Finance Bill 2026 reforms (including UK-to-UK removal and financial transactions) and ICTS reporting

Published by a LexisNexis Tax expert

Practice notes

FORTHCOMING CHANGE relating to UK transfer pricing legislation:

Finance Bill 2026 (as introduced) sets out a suite of revisions to the UK’s transfer pricing framework. Taking effect for accounting periods commencing on or after 1 January 2026, once enacted the package will, amongst other matters:

withdraw UK‑to‑UK transfer pricing, with exclusions to stop tax arbitrage;
revise the participation condition;
confirm the OECD Model Tax Convention and OECD Transfer Pricing Guidelines operate as interpretative aids; and
update the financial transactions rules to better align the UK regime with the OECD Transfer Pricing Guidelines.

Alongside this, the government announced at Budget 2025 that it will proceed with an annual reporting obligation for in‑scope multinationals on cross‑border related party transactions for accounting periods beginning on or after 1 January 2027; technical regulations for the new ‘International Controlled Transactions Schedule’ (ICTS) are expected in spring 2026.

For more on these changes, see News Analyses: Finance Bill 2026—reform of UK law in relation to transfer pricing, permanent establishment and diverted profits tax; Budget 2025—Tax analysis—International; Tax update spring 2025—Tax analysis—Corporation tax and international; Analysis—Reform of...

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Web page updated on 22/05/2026

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