Legal Practice Notes

April 2026 From 1 April 2026, Finance Act 2026 introduces a 40% allowance for main rate expenditure incurred on/after 1 January 2026 and reduces main rate writing‑down allowances to 14% for corporation tax; remote gaming duty rises to 40% and bingo duty is abolished; HMRC brings in penalties for betting and gaming errors and tighter rules for agents who facilitate non‑compliance; aggregates levy is uprated by RPI and replaced in Scotland, with consequential amendments; new UK double tax treaties with Portugal, Romania and Andorra take effect for corporation tax. From 6 April, the 40% allowance and 14% WDA apply for income tax; dividend rates increase by 2p; HMRC gains new CIS fraud powers; VCT upfront relief falls to 20% while EIS/ VCT and EMI limits increase; workplace benefits relief expands and the homeworking expense deduction ends; agencies or end clients become liable for PAYE/ NICs where...

FORTHCOMING CHANGES : In Budget 2025, the government set out plans to legislate through Finance Bill 2026 (also referred to as Finance ( No 2) Bill 2024–26) to introduce measures aimed at promoters or enablers of marketed tax avoidance. These provisions sit in Part 6 of the Bill, as introduced on 4 December 2025, and encompass: revisions to the DOTAS and DASVOIT civil penalty framework, allowing HMRC to issue DOTAS penalties directly rather than seeking tribunal approval a broad prohibition on promoting marketed arrangements with no realistic prospect of success, and a prohibition on promoting arrangements named in universal stop regulations ( USRs). Breach of either prohibition would lead to sanctions including publication, financial penalties and criminal prosecution promoter action notices ( PAN). A PAN would require businesses to cease providing goods or services to promoters of tax avoidance where those goods or services are used in the...

FORTHCOMING CHANGE relating to the modernisation of stamp taxes on shares framework: From 2027, stamp duty and SDRT will give way to a unified, self-assessed charge on securities—the securities transfer charge ( STC)—to be paid and filed via a new online portal. The intended shape of the STC broadly reflects the proposals consulted on in 2023. Finance Bill 2026 ( FB 2026) confers, with effect from Royal Assent, a power to make secondary legislation so that taxpayers can trial the digital service, self-assess their stamp taxes on securities liabilities, and submit transaction details electronically. Under this approach, liabilities are determined by the taxpayer and both payment and notification occur through one digital route. For more information on the modernisation of stamp taxes on securities, see: News Analyses: Budget 2025— Tax analysis— Stamp and transfer taxes Tax update spring 2025— Stamp taxes on shares...

FORTHCOMING CHANGE relating to the modernisation of stamp taxes on shares framework: From 2027, Stamp Duty and SDRT will be replaced by a single, self-assessed charge on securities—the securities transfer charge ( STC)—which will be paid and reported through a new online portal. Broadly, the design of the STC will reflect the proposals consulted on in 2023. Finance Bill 2026 ( FB 2026) will, on Royal Assent, create a power for secondary legislation enabling taxpayers to trial the new digital service, allowing self-assessment of stamp taxes on securities obligations and electronic reporting of transactions. For more information on the modernisation of stamp taxes on securities, see: News Analyses: Budget 2025— Tax analysis— Stamp and transfer taxes Tax update spring 2025— Stamp taxes on shares modernisation Tax update spring 2025— Tax analysis— Stamp and transfer taxes TAMD 2023— Stamp taxes on shares...

An acquisition of a company or of business and assets in a private equity buyout, although comparable to a standard acquisition, carries several notable differences. These arise chiefly from the roles and status of the parties involved—the private equity investor, the management team, the buyer (or newco) and the seller. For further guidance on structuring a private equity investment, see Practice Note: Buyouts. This Practice Note examines the key elements of due diligence and the acquisition documentation. Due diligence As with any share or business and asset purchase, both management and the private equity investors must carry out their own due diligence investigations into the target business. Purpose From the buyer’s standpoint, due diligence aims to highlight potential deal breakers at an early stage, to identify risk areas and evaluate how the target manages those risks, and to agree where ultimate...

This Practice Note considers the chapter 6 trading finance gateway within the controlled foreign company ( CFC) regime. As outlined in Practice Note: CFC rules—initial chapter 3 gateway— Meaning of gateways, a CFC tax charge arises only where profits pass into the CFC charge gateway. A CFC’s assumed total profits ( ATP) will enter the CFC charge gateway only if they fall within the initial chapter 3 gateway and/or any of the gateways set out in chapters 4–8 of Part 9A of the Taxation ( International and Other Provisions) Act 2010 ( TIOPA 2010)... When does the chapter 6 trading finance gateway need to be considered?...

Roll-over relief under the corporate intangible assets regime in Part 8 of Corporation Tax Act 2009 ( CTA 2009) This Practice Note considers the roll-over relief available under the corporate intangible assets regime in Part 8 of the Corporation Tax Act 2009 ( CTA 2009). Relief is not automatic; it must be claimed. It applies where a company realises an IFA (the old asset) and then incurs expenditure to acquire another IFA (the new asset). The rules can likewise apply if the new asset is obtained by another company within the same IFA group. In broad terms, the regime postpones all or part of the taxable credit that would arise on the realisation of the old asset. That deferred credit is brought back into charge when the new asset is realised (unless roll-over relief is also claimed on that later event)....

This Practice Note covers the main operative provisions of the corporate interest restriction ( CIR) rules. The CIR rules are lengthy and intricate, with numerous core provisions driven by calculations and reliant on a suite of defined expressions. Accordingly, those seeking a concise introduction to how the rules operate, together with the rationale for their introduction, should consult Practice Note: Corporate interest restriction—quick guide. This Practice Note explains many of the defined expressions and ideas used by the regime where relevant; for swift reference to definitions of principal CIR terms, see Corporate interest restriction—glossary of key terms. Readers are also directed to: Practice Note: Corporate interest restriction—administration, which addresses the procedural aspects of the CIR, such as the way a restriction required by the rules is allocated within a group, the notion of the reporting company, and the interest restriction return Practice Note:...

This Practice Note sets out the principal tax considerations where creditors move to enforce security over the assets of a distressed company or corporate group. Related Practice Notes in this series address tax issues concerning: acquisitions of distressed debt, and debt restructurings (ie waivers, debt/equity swaps or renegotiations) In addition, Tax and distressed debt—checklist of points to consider distils the main tax points to bear in mind when dealing with distressed debt in general. This Practice Note reviews the enforcement routes open to creditors of troubled businesses and the consequences that may follow. For a detailed look at the loan relationships provisions on debt releases, see: Loan relationships—impairment and debt releases Loan relationships—impairment and debt releases: connected companies Types of enforcement As explained in Practice Note: Tax and distressed debt—debt restructurings, lenders will frequently engage in a...

Introduction and background Certain advisers who deliver tax advice and deal with HMRC for clients will have to enrol with HMRC in future and comply with baseline standards set by the department. HMRC has signalled that roll-out will feature a transition window of no less than three months. In the Autumn Budget 2024, on 30 October 2024, the government stated it would require registration of tax advisers acting with HMRC on clients’ behalf from April 2026, and it released a summary of replies to a consultation first issued in March 2024. Those replies clearly backed compulsory registration. In Budget 2025, the government said that, in light of the consultation feedback, it would not regulate tax advisers and would collaborate with the profession to lift standards in the tax advice market. In July 2025, HM Revenue & Customs ( HMRC) issued draft...

Restricted securities The provisions governing directors and employees in relation to restricted securities, as set out in Chapter 2, Part 7 of the Income Tax ( Earnings and Pensions) Act 2003 ( ITEPA 2003), are frequently seen in practice on management-involved corporate transactions. Put simply, restricted securities are employment-related securities which: at the time of acquisition are subject to identifiable restrictions that depress the value of the securities For the meaning of employment-related securities, see Practice Note: What is an employment-related security? For a fuller explanation of the definitions of restricted securities and restricted interests in securities, see Practice Note: What are restricted securities? Restrictions are commonly intended to encourage an employee or director to remain with the employer and to meet specified performance conditions. They may affect an employee’s ability to keep shares (for example, the articles of association may require a transfer to...

Corporate intangible assets regime — general rule Under Part 8 of the Corporation Tax Act 2009, a company’s profits and losses on intangible fixed assets are taken into account for corporation tax as credits and debits in accordance with the accounting treatment of those assets. In essence, GAAP-compliant accounts form the foundation for determining the taxable and relievable amounts connected to a company’s IFAs. This is often summarised as ‘tax follows the accounts’. There are, however, several exceptions where the corporate intangible assets rules require a departure from the accounting outcome, with IFA credits and debits calculated on a different footing. For broader guidance on the taxation of IFAs, see Practice Note: How intangible fixed assets are taxed—basic principles. Relevant assets One instance where the legislation moves away from relying on the company’s accounts concerns ‘relevant assets’. A relevant asset is: goodwill in a business or part of a...

Introduction to Musharaka—a profit and loss sharing instrument of Islamic finance At the heart of Islamic finance lies the maxim ‘no profit without risk’, ie no person should realise a gain unless they bear some degree of risk. This concept is most clearly shown through the application of profit and loss sharing instruments. For further detail on this principle, see Practice Note: Key principles of Islamic finance. This Practice Note examines Musharaka, an Islamic finance technique originally founded on profit and loss sharing and broadly analogous to a conventional partnership arrangement. In straightforward terms, a Musharaka is a partnership customarily entered into by two or more parties, not necessarily for a fixed term, and most commonly for the purpose of undertaking a business venture. In a typical Musharaka, each participant makes a capital contribution to the venture and profits and losses are shared between them. A...

The general anti-abuse rule (the GAAR): neutralises, by way of just and reasonable adjustments made by HMRC or the taxpayer, any tax advantage that would, absent the GAAR, arise from abusive tax arrangements; and has been in force since 17 July 2013 (the date of Royal Assent to the Finance Act 2013), except that, for National Insurance contributions, it has applied only from 13 March 2014. This Practice Note: describes the Finance Act 2021 measures that adapted the standard GAAR procedures for partnerships; explores the GAAR’s purpose; sets out when the GAAR applies and examines: the meaning of tax arrangements and tax advantages; the taxes within scope; what is “abusive” for GAAR purposes; and the GAAR penalty; outlines taxpayer safeguards built into the legislation; explains how the GAAR interacts with other...

Warranty and indemnity ( W& I) insurance in M& A transactions W& I insurance can be used in private company sales and purchases, whether the deal is a share sale or an asset sale. The buyer or the seller may arrange cover for losses arising from breaches of the seller’s warranties or indemnities set out in the relevant share purchase agreement or asset purchase agreement (the acquisition agreement), including any tax indemnities under a tax covenant. Although chiefly applied in private company M& A, it may on occasion feature in public company transactions where the target or its shareholders provide warranties. As well as allocating risk, parties frequently use the policy tactically: a bidder in a competitive auction can separate its offer from rivals, and sellers can reduce sums locked in escrow and realise proceeds more quickly. In the UK and other...

There is no overall cap on the benefits a registered pension scheme may provide. Nevertheless, under the Finance Act 2004 ( FA 2004), if a scheme makes an unauthorised payment: tax liabilities will usually arise for both the individual receiving the payment and the scheme itself. For more detail, see Tax charges on making unauthorised payments, below in the worst case, the scheme could face de-registration, leading to the loss of its tax-privileged status. For more detail, see De-registration and the de-registration charge, below specific reporting obligations will apply. For more detail, see Reporting requirements and penalties, below In certain situations, HMRC may grant a discharge from some of the tax charges linked to unauthorised payments. For guidance, see Applying to HMRC for discharge from tax charges, below. Further exceptions to the standard unauthorised payments position exist and are set out in...

Venture capital is a form of private equity finance supplied to early-stage, start-up companies with limited or no trading history, aimed at backing businesses at the outset. Background to venture capital investment The combination of a short operating track record and, in many instances, an unproven business model underpinned by untested technology means committing funds to these companies is a high-risk strategy. Investors who focus on such ventures will typically contribute technical capability as well as managerial expertise to the management team, but, given the risk profile, they will also seek high rates of return on the capital they deploy. Why seek investment? Businesses that pursue venture capital are generally too small to raise capital in the public markets and are unable to secure debt finance, so equity investment becomes the viable route to funding growth. Types of investment and...

ARCHIVED: Owing to reforms proposed under The Windsor Framework, announced by the UK government on 27 February 2023, this Practice Note is archived and no longer maintained. The contents were correct as at 1 January 2021. For details on The Windsor Framework and how it affects VAT in Northern Ireland, see The Windsor Framework. From 1 January 2021, movements of goods between Northern Ireland ( NI) and Great Britain ( GB) will be treated as imports and exports for VAT. This Practice Note explains the legislative basis for that treatment and the method for accounting for VAT on such flows. It also covers the VAT consequences of transferring a VAT-registered business’s own goods between GB and NI, intra-group movements, and movements of goods involving the EU. Background The UK ceased to be an EU Member State on 31 January 2020. On that day, the UK entered an...

Damages or compensation payment may attract VAT Whether VAT applies to a damages or compensation payment depends on the precise purpose of the sum. Where the amount is purely compensatory and not consideration connected to a supply, it sits outside the scope of VAT. However, if the recipient (the claimant) provides something in return, that constitutes a supply for VAT purposes. Getting the VAT treatment correct is essential. If the sum is VATable, the claimant will expect the defendant to pay VAT on top of the core damages or compensation. Where the payment is made under a settlement agreement, that document should state that any VAT is payable in addition to the principal; otherwise the figure is treated as VAT-inclusive. If the defendant is a business with full VAT recovery it should be able to reclaim the VAT, but only where VAT was in fact...

For UK taxpayers operating a property-related business in the UK—whether trading or investing in land—the tax treatment of funding costs is critical. After the price paid for the land, the next major outlay is typically the cost of financing that acquisition. It is essential to ensure that: such funding costs are, as far as possible, tax-deductible, and interest can be paid without withholding tax This Practice Note: briefly reviews the rules on when interest payable by a UK taxpayer is deductible, and examines in depth the obligations to withhold tax on interest payments within a typical real estate holding structure For this Practice Note, CGT refers to both capital gains tax and corporation tax on chargeable gains. Interest deductibility Corporation taxpayers For a company within the charge to corporation tax, interest due on a loan is governed by the loan...