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• There has been ongoing work to reform the UK’s transfer pricing, permanent establishment and diverted profits legislation. We have now seen the outcome of that work as several documents, including draft legislation for technical consultation, were issued. The proposed changes should provide helpful simplification of certain aspects of the rules but there are some areas where complexity is likely to remain. Our article sets out the key changes and highlights where tensions may arise;
• In addition, the Government is (as previously trailed) consulting on restricting the exemption from UK transfer pricing rules so that only Small Enterprises qualify for exemption (currently Medium Enterprises also qualify for exemption). It is also consulting on introducing new reporting requirements for international controlled transactions which it is intended to apply to both large and medium-sized enterprises. These measures are designed to protect the UK tax base from cross-border profit diversion and the additional reporting will aid data-led risk assessment by HMRC. Those likely to be affected by these changes will need to consider the impact and start preparing for the additional compliance; and
• We also include an article on the employment tax changes announced in the TUSAR. It will be welcome news to hear that the mandatory payrolling of benefits has been delayed by one year until April 2027. A technical paper produced alongside this news included changes to RTI reporting fields, P11D forms for globally mobile employees, valuing benefits, penalties and other matters. Our article includes a handy timeline of next steps.

Aside from these announcements there are other interesting nuggets including response documents on the Tax Administration Framework Review (together with a new consultation on improving HMRC’s approach to dispute resolution) and on a recent consultation on Stamp Taxes on Shares. There were also a number of releases in relation to Indirect taxes, perhaps most notably an announcement that the threshold for land, buildings and civil engineering work in the capital goods schemes will increase from £250,000 to £600,000.

Moving away from the TUSAR, many readers will be following the progress of the UK’s Carbon Border Adjustment Mechanism with interest. The Government sees the CBAM as a critical step in delivering net zero by 2050. The tax is intended to ensure that imported goods, particularly those with high carbon emissions, are subject to a similar carbon price to domestic products. The new tax will apply to certain goods when they enter the UK on or after 1 January 2027. Draft legislation was published on 24 April for technical consultation, along with a policy update note and other material. The countdown to the UK’s CBAM has begun and businesses need to prepare. Our CBAM team would be happy to help (contact details are in the article).

Our next dedicated article is about Employee Ownership Trusts, a special kind of employee benefit trust. Sales of shares to these trusts can be CGT free in certain circumstances, but conditions are attached. Our article explores some of the consideration requirements that apply to share disposals to Employee Ownership Trusts after 30 October 2024.

Over the last few years, the Government has sought to address practical issues within the UK’s Real Estate Investment Trust regime. HMRC’s guidance has now been updated to reflect the legislative changes from Finance Acts 2022 to 2024. Our article highlights some of the key areas.

The R&D regime in the UK continues to be an area of interest for many taxpayers and in this edition, we have two articles on the regime. The first covers recent correspondence between HMRC and the Chartered Institute of Taxation which confirms how the R&D going concern rules with regard to intra-group transfers should be applied. The second article covers revised guidance that has been issued by HMRC which deals with situations where R&D claims will be accepted for periods for which a claim notification was due but not received.

Our final duo of articles both deal with IHT. The first provides more detail on changes to Business and Agricultural Property Reliefs and, in particular, offers some thoughts on the consultation published on 27 February which specifically considered property settled into trust. The second article highlights that, as IHT liabilities may not be fully relieved by Business Property Relief from 2026/27, individuals and trustees may need to consider whether they can justify valuations placed on those assets for IHT purposes.

Finally, we include a link to where Tim looks at digital services taxes and argues that they are here to stay. We also bring you Other News In Brief which this week includes an FSB report on small businesses and the cost of tax compliance, a map of the seventh Liverpool City Region Freeport customs site as well as ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø’s updated guide to the Employment Rights Bill and the Government’s ‘Make Work Payâ€� agenda. Our global Head of Tax Policy, Grant Wardell-Johnson provides a briefing on the recent OECD Inclusive Framework plenary meeting in Cape Town. And for those that are having to deal with the global minimum tax we include a link to register for an upcoming ÀÖÓ㣨Leyu£©ÌåÓý¹ÙÍø webinar taking place on 7 May on understanding Global Minimum Tax UK compliance.

We also include links to the latest indirect tax Talking Points issue as well as a roundup of news from our international tax network.