Legal Practice Notes

This Practice Note This Practice Note explains what is typically included in a UK tax opinion prepared by tax lawyers for UK tax resident securitisation companies participating in a whole business securitisation (also described as an operating asset securitisation). A specific corporation tax regime applies to companies that: qualify as securitisation companies; and meet two additional conditions: the unallowable purposes test; and the payments condition That regime is contained in the Taxation of Securitisation Companies Regulations 2006, SI 2006/3296 ( Securitisation Regs), and is often called the permanent securitisation regime. It is described in Practice Note: Asset-backed securitisations—the UK tax treatment by reference to an asset-backed securitisation structure, and can also apply to a whole business...

Tax is a key consideration when selecting an appropriate structure for holding UK commercial property. The prevailing route for investing in UK commercial property is typically a UK‑incorporated, tax‑resident limited company. Non‑ UK investors have also gravitated towards offshore ownership for investment, commonly via a non‑ UK resident special purpose vehicle ( SPV). Following reforms to the taxation of gains realised by non‑ UK residents on UK immovable property from 6 April 2019, and to the taxation of property income of non‑ UK resident companies from 6 April 2020, non‑ UK resident companies that hold UK commercial assets now fall within UK corporation tax on gains (subject to certain exemptions) and on rental income. As a consequence, a number of the core tax attractions of using non‑ UK resident SPVs to own UK commercial property have been curtailed....

This Practice Note reviews the UK tax considerations around the operation and termination of a joint venture conducted through a limited liability company ( JVCo), which is a distinct legal person from the joint venture parties involved. For further details on the tax treatment of putting a JVCo in place, see Practice Note: Tax implications of establishing a joint venture company. For the purposes of this Practice Note, it is assumed that the joint venture parties are UK tax resident corporate entities and that the JVCo itself is also UK tax resident; for joint ventures with a non- UK element, see Practice Note: Tax implications of international joint ventures. Operation of the JVCo Extraction and taxation of the JVCo’s profits Because the JVCo is an independent legal person, profits generated by the business belong to the company itself and not the parties, unlike a...

This Practice Note explores illustrative tax situations that may occur when a UK management team takes up shares in Newco 1 during a private equity-backed management buyout ( MBO). It should be read alongside Practice Note: Tax and management buyouts—management shareholdings. For an explanation of what MBOs are, and their usual structuring and funding, see Practice Note: Tax and management buyouts—what is a management buyout? The examples below use very simplified calculations, intended only to highlight how outcomes can differ across possible scenarios. Accordingly, they serve purely as an aid to understanding how the different tax charges on management shares can interact, and the significance of available mitigation routes. Note that they address UK tax only. They ignore any potential tax deductions (for example, disposal costs) and assume no anti-avoidance rules apply. The examples consider: the income tax charge on general...

Earn-outs An earn-out is a distinct method of structuring the consideration on a share acquisition, under which part of the purchase price is set by reference to the target’s performance during a defined period after completion of the acquisition. In deals that include an earn-out, the amount paid by the buyer for the shares will usually comprise: an agreed, initial sum of consideration payable on completion of the sale; and a contingent, unascertainable earn-out amount payable over, or at the end of, the agreed earn-out period The initial consideration and the earn-out consideration can be satisfied wholly in cash, in shares or loan notes issued by the buyer (or a connected company), or in any combination thereof. The earn-out component is often calculated by reference to the target company’s profits over a specified span, for example the next two or three accounting periods following completion of the...

Anyone planning to depart the UK should weigh both fiscal and wider practical consequences of the move. Laws and customs in the destination may vary, sometimes sharply, from those in the UK. Securing high-quality information and advice before deciding is essential. healthcare retirement considerations property ownership Prospective emigrants must also think through the fallout if complications disrupt their plan to secure non-resident status, potentially requiring a return to UK residence later. This Practice Note focuses on the key considerations when aiming to become non- UK resident for tax purposes. Leaving the UK—statutory residence test At the heart of the income tax, CGT and IHT position for leavers is the concept of residence. Up to 6 April 2025, domicile also played a significant role in assessing IHT exposure and access to the remittance basis. From 6 April 2025, domicile no longer has...

This Practice Note examines the UK tax considerations when setting up a joint venture run through a partnership. For the purposes of this Practice Note, it is assumed that: the joint venture participants are UK tax resident corporate bodies the joint venture partnership vehicle is likewise UK tax resident; and the venture’s activities are conducted in the UK For information on: operating and winding up a joint venture partnership, see Practice Note: Tax implications of operating and terminating a joint venture partnership; and joint ventures with a non- UK dimension, see Practice Note: Tax implications of international joint ventures This Practice Note does not address certain investment partnerships that are unit trust schemes which may not be treated as transparent for tax purposes. What types of partnership may be used for a joint venture? A joint venture may employ one of the...

FORTHCOMING CHANGE relating to UK transfer pricing legislation: The Finance Bill 2026 (as introduced) outlines wide-ranging revisions to the UK’s transfer pricing rules. Once enacted, for accounting periods starting on or after 1 January 2026, the measures will, amongst other things, abolish UK-to- UK transfer pricing (with exclusions intended to prevent tax arbitrage), modify the participation condition, confirm that the OECD Model Tax Convention and the OECD Transfer Pricing Guidelines operate as interpretative aids when applying the legislation, and introduce a series of updates to the financial transactions provisions to better align the UK framework with the OECD Transfer Pricing Guidelines. In parallel, the government announced at Budget 2025 that it will proceed with an obligation for in-scope multinationals to file and report annual information on cross-border related party transactions for accounting periods beginning on or after 1 January 2027—the technical...

Taxpayers who settle tax after the deadline are liable to interest, charged at a rate laid down in law. The Finance Act 2009 ( FA 2009) established a unified framework for interest on late-paid tax intended to apply across all taxes, excluding excise duties; corporation tax and petroleum revenue tax were at first outside the framework, but are now slated for inclusion from a date yet to be confirmed. This Practice Note outlines both the unified rules and also covers how interest may arise where late payment falls outside that framework. Harmonised late paid interest regime The FA 2009 framework is being phased in progressively across the different taxes......

This Practice Note This Practice Note examines the principal tax considerations that arise when setting up, managing and winding up an international joint venture, in addition to those encountered with a domestic UK joint venture... For guidance on the UK tax aspects of domestic joint ventures, refer to the following Practice Notes: Tax implications of contractual joint ventures Tax implications of establishing a joint venture partnership Tax implications of operating and terminating a joint venture partnership Tax implications of establishing a joint venture company Tax implications of operating and terminating a joint venture company For this Practice Note, an international joint venture is treated as an arrangement where either the joint venture vehicle (if there is one) or at least one joint venture party is not UK tax resident. It is assumed throughout that the joint venture...

This Practice Note will consider the following: direct tax issues for UK resident corporate bondholders direct tax issues for UK resident individual bondholders the UK stamp tax and VAT consequences of being a bondholder (whether individual or corporate) Bondholders may likewise wish to note the possible implications for them of the Foreign Account Tax Compliance Act ( FATCA) and the EU Financial Transactions Tax ( FTT). These are addressed in Practice Note: Tax issues for bond issuers— FATCA and FTT. Direct tax issues for corporate bondholders For UK resident companies acquiring a bond, the principal tax questions to assess are: the loan relationship rules—the bond will almost always be a loan relationship and be taxed on that basis chargeable gains—the bond will almost always be a qualifying corporate bond and exempt from corporation tax on chargeable gains withholding tax—the bondholder will look to rely on an exemption from...

Practice Note: Forms of business vehicle—tax summary When one or more individuals decide to set up a business, they must choose the vehicle through which the business will be run. In addition to the commercial and legal reasons informing that decision (see Practice Note: Forms of business vehicle), the tax treatment applicable to each distinct vehicle will often be the determining factor in deciding whether it is suitable for carrying on a particular business. A summary of the tax consequences of operating as: a sole trader a general partnership a limited partnership a limited liability partnership a company is addressed in Practice Note: Forms of business vehicle—tax summary and the Choice of business vehicle—tax comparison table. This Practice Note brings together some of the principal tax considerations that shape the decision of a person, or a group of people, when weighing the choice of business vehicle,...

FORTHCOMING CHANGE relating to the tax treatment of carried interest: After a call for evidence on the taxation of carried interest ran through summer 2024, the Autumn Budget 2024 confirmed the government's intention to launch a revamped regime for carried interest from 6 April 2026, positioned within the income tax system and accompanied by bespoke rules recognising the distinctive features of this remuneration. A consultation then explored possible new qualifying criteria for entry to the regime, with the government issuing its response in June 2025. On 21 July 2025, draft legislation establishing the new carried interest rules was released for inclusion in Finance Bill 2026. The measures will apply to carried interest arising on or after 6 April 2026. These announcements were reiterated at the 26 November 2025 Budget, which also noted that certain amendments had been made to the draft to reflect...

Follow the link below to download the training presentation. Abolition of non-dom regime and introduction of residence-based IHT regime Finance Act 2025 ( FA 2025) enacted significant measures abolishing the remittance basis of taxation and introducing a new residence-based system, effective from 6 April 2025. It also substituted domicile as the principal legal determinant of inheritance tax ( IHT) exposure. Further wide-ranging reforms encompassed revisions to the legal criteria for excluded property status, the removal of protected settlements status for offshore trusts, and further reforms to......

This year’s annual round-up surveys the standout developments of 2017 and signals what to expect in 2018. It covers: the shift in the Budget timetable and the issue of three Finance Bills, the arrival of corporate interest restriction ( CIR) rules, revisions to corporation tax loss relief, the Supreme Court’s judgment in the Rangers case, and updates to Lexis Nexis®’s content, showcasing last year’s highlights and what is planned for the next 12 months. Reviewing 2017 Budgets and Finance Bills What happened? 2017 saw the publication of no fewer than three Finance Bills, prompted by the general election and moving the annual Budget from spring to autumn. The first of these became the Finance Act 2017, the second the Finance ( No 2) Act 2017 ( F( No 2) A 2017), and the third is to be enacted in 2018 as the...

Practice Note Shifts in the economy can lead to sales of distressed debt portfolios. In such periods, banks commonly look to cut balance sheet exposure to underperforming companies or individuals, while private equity and similar funds pursue returns by buying these portfolios and then securing realisation or repayment of the underlying liabilities. This Practice Note sets out the tax considerations relevant to an acquisition of a distressed debt portfolio. For the purposes of this Practice Note, distressed debt is described as non-performing loans ( NPLs). NPLs may comprise, for instance, residential mortgage lending or corporate borrowings... Related Practice Notes debt restructurings (ie waivers, debt/equity swaps or renegotiations) enforcement of debts In addition, Tax and distressed debt—checklist of points to consider summarises the principal tax points to address when approaching distressed debt more generally......

FORTHCOMING CHANGE relating to the tax treatment of carried interest: After a call for evidence on the taxation of carried interest undertaken during summer 2024, the Autumn Budget 2024 announced plans to introduce an overhauled carried interest regime from 6 April 2026 within the income tax framework, accompanied by bespoke rules recognising the distinctive nature of this reward. This was followed by a consultation considering possible new qualifying conditions for entry to the regime, to which the government published its response in June 2025. On 21 July 2025, draft legislation setting out the regime was released for inclusion in Finance Bill 2026. The provisions will take effect for carried interest arising on or after 6 April 2026. These measures were confirmed at the Budget on 26 November 2025, which also noted amendments to the draft to reflect stakeholder feedback. In the meantime, ahead of the new...

If a UK-resident company opts to issue a bond to raise debt finance, it should, alongside the many other commercial and legal considerations, assess the tax consequences for it of taking the bond route, from the initial issuance, the continuing servicing of the bond and the redemption (that is, repayment) of the bond at the end of its term. The key areas that will arise, and which are outlined in this note, relate to: loan relationships withholding tax stamp taxes, and VAT An issuer of bonds will also need to take account of certain international developments such as the Foreign Account Tax Compliance Act ( FATCA) and the potential introduction of the EU financial transactions tax ( FTT) (for which, see: FATCA and FTT below). The taxation of bondholders will also matter for the issuer because: it will affect the...

Characterising overseas entities for UK tax purposes It is essential to characterise overseas entities for UK tax, as this determines how they, their members and potentially other connected persons are taxed... Transparent — treated in a similar manner to a partnership or certain trusts for UK tax; not a taxable person in its own right for direct taxes; profits are commonly assessed on UK‑resident members as they arise, whether or not distributed Opaque — broadly treated like a company and therefore a taxable person; its profits are typically not taxed in the UK until paid out to UK‑resident members, or where anti‑avoidance rules attribute undistributed profits to another person (eg under controlled foreign company rules) Opaque for capital gains but transparent for income — a hybrid approach applying in particular to some non‑ UK unit trust schemes and...

FORTHCOMING CHANGE relating to the UK funds regime : Following the government’s examination of the UK funds regime, proposals include continuing to monitor the tax treatment of the new long‑term asset fund structure ( LTAF) (see News Analyses: Review of the UK funds regime—an analysis and HM Treasury’s review of the UK funds regime—a call for input). In tax parlance, ‘authorised investment fund’ ( AIF) covers two vehicles: the authorised unit trust ( AUT) and the open‑ended investment company ( OEIC). Both AUTs and OEICs are forms of collective investment scheme, authorised and regulated by the Financial Conduct Authority. The label ‘ AIF’, applying to both, appears in the Authorised Investment Funds ( Tax) Regulations 2006, SI 2006/964, which set out the core tax rules for these funds. Within this subtopic, those provisions are called the ‘ AIF Tax...