This monthly briefing note summarises some tax and other news items of interest to UK-focused private companies and their management teams and shareholders.
United Kingdom | Deloitte Private | 30 June 2026
Tax Update 2026
On 23 June 2026, the government published a package of tax policy announcements and supporting documents in an update titled Tax update 2026: simplification, modernisation and fairness. The government has published a policy paper, summarising the day’s announcements. A written ministerial statement on the announcements was made by Exchequer Secretary to the Treasury Dan Tomlinson MP.
A number of new and upcoming consultations were announced as part of the package, most of which relate to the taxation of individuals, indirect taxes, or customs. These include a consultation on changes to the taxation of distributions, and a consultation seeking views on changes to the time of payments arising under income tax self-assessment, which proposes that payments would be due in-year, earlier than under the current rules.
Other tax announcements in the package were also largely non-business tax focussed. Business tax-related announcements included plans to introduce secondary legislation to prevent research and development and creative sector expenditure credits from bringing companies into the corporation tax quarterly instalment payment (QIP) regime where those companies would not otherwise be required to pay via QIPs.
HMRC announce phased introduction of mandatory benefit in kind payrolling
HMRC have announced that, following extensive engagement with stakeholders, the planned introduction of mandatory PAYE real-time reporting of income tax and Class 1A NICs on certain benefits in kind and taxable expenses from April 2027 will now be phased in. From 6 April 2027, mandatory payrolling will now be introduced only for a small number of benefits in kind (Phase 1), including company car, van, fuel, and medical benefits. Phase 2 will commence from 6 April 2028 and is expected to introduce mandatory payrolling of most other types of benefits in kind (excluding loans and living accommodation benefits which remain voluntary). HMRC have added a new page of guidance on the phased introduction approach to their collection of interim guidance on mandatory payrolling of benefits in kind, with further guidance expected by July 2026.
HMRC launch consultation on UK resident individuals and US LLCs
On 10 June 2026, HMRC published a consultation titled UK resident individual members of LLCs and other reverse hybrids. The consultation considers solutions for UK resident individuals who are members of entities that are transparent in their jurisdiction of establishment but opaque in another jurisdiction (‘reverse hybrids’), such as US LLCs, potentially resulting in double taxation. Proposals under consideration include UK matching of the foreign tax treatment, with no income tax payable on distributions received from the entity. The consultation also requests views on alternative forms of relief, including relief for foreign tax suffered by way of deduction or credit. HMRC state that they do not intend to change the position for corporate members of such entities. The consultation closes on 31 July 2026.
Supreme Court dismisses HMRC’s and taxpayers’ deferred remuneration arrangement appeals
The Supreme Court has dismissed the appeals of HMRC and the taxpayers in HMRC v HFFX LLP and Atkins and others v HMRC. The judgment focuses on the income tax treatment of payments made by the LLP to individual members via a ‘deferred remuneration arrangement’ involving a Capital Allocation Plan (CAP). The arrangement involved an initial allocation of partnership profits to a corporate member under the CAP, followed several years later by contributions of ‘special capital’ back to the LLP which were then reallocated to individual members for them to withdraw. As was the case at the Court of Appeal in 2024 in HFFX LLP, and in 2023 in the similar case of BlueCrest Capital Management LP, the Supreme Court dismissed HMRC’s arguments that the profits initially allocated to the corporate partner should have been immediately chargeable to income tax as partnership profit shares of the individual members. However, the Supreme Court also dismissed the taxpayers’ arguments that the awards of special capital were not subject to income tax in subsequent periods, agreeing with the Court of Appeal in both HFFX and BlueCrest that the income was within the scope of the charge to income tax on ‘miscellaneous income’. As with the Court of Appeal, the Supreme Court declined to address alternative arguments put forward by HMRC based on the income tax ‘sales of occupation income’ rules.
HMRC manuals: Anti-avoidance rules for share exchanges and reconstructions
HMRC have added an appendix to their Capital Gains Manual that sets out further guidance on the changes to the anti-avoidance rules for share exchanges and company reconstructions, which were announced at Budget 2025, and took effect on 26 November 2025.
The appendix sets out, inter alia, how HMRC expect the rules to apply to certain preparatory reorganisations, including to prepare a business for entry into certain tax-advantaged regimes such as the Real Estate Investment Trust (REIT) regime, or to ensure that a share sale will qualify for a relief or exemption, such as the Substantial Shareholding Exemption (SSE). HMRC note that the contents of the new appendix will be incorporated into the main manual in due course.
Upper Tribunal refuses HMRC appeal on whether an LLP was ‘carrying on a business’
The Upper Tribunal has dismissed HMRC’s appeal, and the taxpayers’ cross-appeal in the Limited Liability Partnership (LLP) decision HMRC v GCH Corporation Ltd and others. The case considers section 59A Taxation of Chargeable Gains Act 1992 which allows for a UK LLP to be treated as a tax transparent entity for UK chargeable gains and capital gains tax purposes but only if it “carries on a trade or business with a view to a profit”. (Equivalent LLP tax transparency rules, with similar conditions, can be found in section 1273 Corporation Tax Act 2009 and section 863 Income Tax (Trading and Other Income) Act 2005). HMRC considered that the statutory condition was not satisfied in the taxpayers’ circumstances, with the result that one of the appellants, an LLP, should have been taxed as an opaque/non-transparent entity, affecting the tax treatment of assets contributed to the LLP by the other appellants, who were members of the LLP.
In 2024, the First-tier Tribunal (FTT) applied case law on the meaning of “carrying on a trade” and “carrying on a business with a view to a profit” to the activities of the LLP. After applying the standard ‘badges of trade’ analysis approach to its findings of fact, the LLP’s activities, which involved making a return from a small number of investments and dealings in a small number of listed shares over a relatively short period of time, were found to be insufficient to be a trade. However, the FTT considered the activities were sufficient to be a “business carried on with a view to a profit,” and as a result, the LLP was tax transparent and the taxpayers’ returns were correct. The Upper Tribunal has now unanimously agreed with the FTT, finding no good reasons to disturb its findings and evaluative conclusions on either of these matters.
HMRC manuals: Cash cancelled and net settled share options
HMRC have published a manual page (see BIM44415) setting out their view that, for shares provided under Restricted Stock Unit plans (RSUs) and Long Term Incentive Plans (LTIPs), section 1288 CTA 2009 can apply. Where this is the case, corporation tax deductions previously denied in periods that ended more than 9 months before the option is exercised may become deductible in the period the option is exercised.
Bolt Services UK Limited: Application of TOMS to ride-hailing services – Court of Appeal
The Court of Appeal has agreed with HMRC that supplies by Bolt Services UK Limited of private hire vehicle ride-hailing services did not fall within the tour operators’ margin scheme (TOMS). The Upper Tribunal and First-tier Tribunal had previously held that Bolt’s supplies were within TOMS. HMRC appealed against the FTT and UT decisions, and the Court of Appeal has accepted HMRC’s primary argument that, contrary to the ‘high-level’ approach taken by the FTT and UT, the correct approach when considering the application of TOMS is to ask whether the supply in question is identical or at least comparable to the supplies of tour operators and travel agents. The Court found that Bolt’s services were not identical or comparable. Comparability must be assessed by reference to the aims of TOMS, namely that of preventing distortions of competition and inconsistent VAT treatment for truly similar services. HMRC’s secondary argument was that the FTT and UT had erred in concluding that the supplies made by drivers to Bolt were not ‘materially altered’ by Bolt and that Bolt’s supplies to its customers were not ‘in-house’ supplies. If the supplies were materially altered or in-house supplies, they would be outside the scope of TOMS. Given the Court’s conclusion on the primary argument, it did not need to consider HMRC’s secondary argument and it allowed HMRC’s appeal. (Contact: Donna Huggard)
HMRC guidance: VAT recovery on pension scheme services
Following the publication of Revenue and Customs Brief 4 (2025) (RCB 4 (2025)) in June 2025, HMRC have updated their guidance regarding the deductibility of VAT incurred on services relating to funded occupational pension schemes. The guidance has been published in HMRC’s VAT Input Tax Manual from VIT44600 to VIT44750. Prior to RCB 4 (2025), HMRC made a distinction between scheme-related ‘administration’ and ‘investment’ services, and generally accepted that the sponsoring employer of a scheme could treat the VAT incurred on ‘administration’ services as its input tax, provided the employer held an invoice addressed to it, even if the employer had not contracted for or paid for the services. HMRC also previously accepted that, where a third-party manager of a scheme provided both administration and investment services, the employer could treat 30% of the VAT as its input tax.
According to the updated guidance, HMRC now consider that to be able to recover the VAT charged on any scheme-related service, sponsoring employers must have directly contracted for that service. HMRC no longer recognise any distinction between administration and investment services, and the VAT Input Tax Manual guidance no longer includes the ‘70/30 split’. Finally, the updated guidance includes several references to ‘onwards supply’ arrangements, under which the scheme trustee(s) would receive the scheme-related services and would use them to make an onwards taxable supply to the employer (of running the pension scheme on the employer’s behalf). HMRC’s intention seems to be for employers and schemes to implement such arrangements in order to facilitate VAT recovery for the employer, although a number of issues would still need to be resolved. Although published on 4 June 2026, the updated guidance sets out HMRC’s policy from 18 June 2025, that is, the date of the RCB. (Contact: Alex Beattie)
Temporary reduced VAT rate
The Value Added Tax (Reduced Rate) (Hospitality and Tourism) Order 2026 has been made to implement the temporary reduced VAT rate of 5% for supplies of children’s meals, children’s tickets, and family attractions from 25 June 2026 to 1 September 2026, inclusive. The reduced rate does not apply to supplies that are already exempt from VAT. The Order adds two groups to Schedule 7A, VAT Act 1994. Group 17 applies to supplies in the course of catering (not takeaway meals) that are part of a children’s meal, being a meal “which is only held out for sale as a meal for a child”. Group 18 covers children and family (including at least one child) tickets to shows, exhibitions, theatres, concerts, and cinemas; and all tickets to circuses, fairs, amusement parks, adventure parks, soft-play centres, zoos, observation attractions, farm visitor attractions, and nature reserves, and to museums and other similar cultural facilities. The reduced rate does not apply to sporting events or facilities, or an event or facilities for physical education or recreation. The Order includes rules setting out how the reduced rate applies to tickets for multiple admissions, including for admissions outside of the relevant period. (Contact: Andrew Clarke)
International Controlled Transactions Schedule transfer pricing requirement from 2027
On 16 June 2026, HMRC published a technical consultation on the expected new UK transfer pricing requirement: the International Controlled Transactions Schedule (ICTS). Under the ICTS, entities will provide HMRC with cross-border related-party transactional data in a structured format annually. The rules are expected to apply for accounting periods starting on or after 1 January 2027. Views are sought by 31 July 2026 on draft regulations and a draft statutory notice, setting out the core reporting rules and information requirements. A draft template has also been published, illustrating the information that would need to be filed. For further information, please read our transfer pricing alert.
OECD – Transfer pricing of intra-group services
On 1 June 2026, the OECD published a public consultation document, Special Considerations for Intra-group Services, on potential revisions to Chapter VII of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (‘OECD Transfer Pricing Guidelines’) in respect of the transfer pricing of intra-group services. The discussion draft seeks views on updating and modernising existing guidance on applying the arm’s length principle to services, including an annex with more than 20 new examples. Comments are invited by 22 July 2026 and a public meeting is expected to be held at the OECD in Paris in November 2026. For further details, please see our alert.
HMRC publish Pillar Two guidance on ‘transitional approach’ to penalties and filings
On 23 June 2026, HMRC published guidance on their 'transitional approach' to (i) penalties; and (ii) Global Information Return (GIR) filing and exchange, for businesses within the scope of the UK’s Pillar Two top-up taxes (multinational top-up tax and domestic top-up tax).
Under the UK's transitional approach to penalties, no late filing penalty will be applied to a return (GIR, self-assessment return and/or overseas return notification (ORN)) that is filed by 1 August 2026.
In addition, the UK has endorsed the OECD's ‘common understanding’ on Pillar Two filings and agreed not to enforce local filing or penalties where an ORN is submitted on time. HMRC have clarified that on time means by 1 August 2026 under HMRC's transitional approach. The ORN must specify the date the GIR was filed overseas. However, if software issues mean the GIR cannot be filed in the overseas jurisdiction before the ORN is due, HMRC advise that the group should nevertheless file the ORN on time, but use a notional GIR filing date of 1 January 2026.
HMRC manuals: Creditability of foreign qualified domestic minimum top-up taxes
HMRC have added a new page (MTT09200) to their Multinational Top-up Tax and Domestic Top-up Tax Manual on the recognition and creditability of foreign qualified domestic minimum top-up taxes (QDMTTs). HMRC state that, in general, they would expect a QDMTT to correspond to corporation tax for the purposes of various UK tax provisions, including unilateral relief and creditable tax of a controlled foreign company. However, whether a particular amount of income is subject to a QDMTT would need to be determined based on the specific facts and circumstances and the relevant legislation. HMRC also confirm that they would expect a QDMTT to be a covered tax for the purposes of a double tax agreement.
HMRC manuals: New Advance Tax Certainty Service manual published
HMRC have published a new manual on the new Advance Tax Certainty Service for major investment projects, which is due to launch on 1 July 2026, and for which expressions of interest are now invited. Draft guidance on the service was issued in December 2025. Broadly, the service will be available for projects with qualifying UK expenditure of at least £1 billion.
EMEA Dbriefs webcasts
The next EMEA Dbriefs webcast will take place on Thursday 2 July 2026 at 12.00 BST/13.00 CEST. In Business travel & remote work survey report, a global client panel will review and debate the recently published Deloitte GES Business Travel & Remote Work Survey Report. The report explores how organisations are managing the growing complexity of business travel and cross-border remote working amidst evolving regulations, heightened enforcement and employee expectations around flexibility. Our panel will discuss key findings and explore challenges faced by organisations when building and managing compliance programs, including governance and ownership, the tension between employee experience and compliance, data and tracking, and thresholds and trigger points.