Business Tax Briefing

‘L-Day’ announcements

On Monday 13 July 2026 (‘L-Day’), the government published a number of draft clauses intended for the next Finance Bill for technical consultation. The draft clauses are accompanied by explanatory and impact notes. Comments from stakeholders are invited by 7 September 2026, subject to a few exceptions. The government also published four new consultations and several consultation outcomes. The Exchequer Secretary to the Treasury, Dan Tomlinson MP, also issued a written ministerial statement summarising the draft legislation and consultations.

Draft legislation included:

• Reform of the foreign permanent establishment exemption – draft legislation was published on a mandatory foreign permanent establishment exemption. This follows a government announcement in May 2026 that UK-resident companies will be required to exclude profits and losses attributable to foreign permanent establishments (PEs) from their corporation tax computation, effectively making the existing ‘foreign branch exemption election’ mandatory. The new rules will apply for corporation tax accounting periods beginning on or after 1 January 2027. Read more in Deloitte’s alert.
• Introduction of the Pillar Two Side-by-Side package and amendments to Multinational Top-up Tax and Domestic Top-up Tax – draft legislation was published implementing the Side-by-Side package in line with the administrative guidance published by the OECD/G20 Inclusive Framework in January 2026 (see our previous alert). The Side-by-Side package legislation will take effect for accounting periods beginning on or after 1 January 2026. In addition, the draft legislation corrects or clarifies some technical points within the existing UK legislation.
• Profits from exploration and exploitation rights – draft legislation was published that explicitly treats certain exploration and exploitation rights in relation to activities undertaken in the UK or on the UK continental shelf as immovable property. This will apply to profits arising on or after 1 April 2027 for corporation tax purposes, where such rights derive their value from, or are used in connection with, land or natural resources.
• Oil and Gas Revenue Levy – draft legislation was published for a new permanent 35% levy on exceptional oil and gas revenues, to take effect when the Energy Profits Levy ends at the end of March 2030, or earlier if the Energy Security Investment Mechanism is triggered.
• Securities Transfer Tax – draft legislation was published for the replacement of Stamp Duty and Stamp Duty Reserve Tax with a single Securities Transfer Tax (STT). The government plans to introduce STT in 2027. The government also published the outcome of its previous consultation on the stamp taxes on shares framework.

New consultations included:

• Simplifying treaty relief from withholding tax on interest paid overseas – a consultation was published that looks at potential ways to simplify obtaining treaty relief from UK withholding tax on interest paid overseas. Options under consideration include self-assessment of whether the conditions for treaty relief are met, without the need to obtain advance HMRC clearance. The consultation closes on 7 September 2026.
• Tax treatment of predevelopment costs – a consultation was published on the tax treatment of predevelopment costs, in line with the government’s commitment in the Corporate Tax Roadmap and following the Supreme Court’s judgment in the capital allowances case Orsted West of Duddon Sands (UK) Limited (see previous Business Tax Briefing). The consultation closes on 21 September 2026. HMRC have also made updates to their Capital Allowances Manual (see CA20060 and CA20070) following the Supreme Court’s judgment.
• Reforming Land Remediation Relief – a consultation was published on potential options to reform Land Remediation Relief. The consultation closes on 21 September 2026.

Bill to increase Electricity Generator Levy rate receives Royal Assent

The Taxation (Energy and Vehicles) Bill completed its stages in the House of Lords on 14 July 2026. No amendments were made to the version that was passed by the Commons on 1 July 2026. The Bill received Royal Assent on 15 July 2026 and has now become Taxation (Energy and Vehicles) Act 2026. As a reminder, the Act increases the Electricity Generator Levy (EGL) rate from 45% to 55% with effect from 1 July 2026. It also includes legislation for two vehicle-taxation changes announced in May 2026 in relation to approved mileage allowance rates for 2026/27, and a temporary vehicle excise duty exemption for certain heavy goods vehicles.

Pillar Two: HMRC extend deadline for resubmission of GIRs that failed validation

On 13 July 2026, HMRC updated their guidance on the extended deadline for corrections to Global Information Returns (GIRs) that were submitted by the 30 June 2026 deadline but failed validation. Such GIRs will be recorded as successful submissions within HMRC systems on the date of original filing on condition that they are amended to pass validations and are re-submitted on or before 1 September 2026 (previously the deadline was by the end of 31 July 2026). Penalty relief for UK Pillar Two self-assessment returns and/or overseas return notifications remains available until 31 July 2026 (see previous Business Tax Briefing).

Align Technology Switzerland GmbH & Align Technology BV: VAT and aligners

Align Technology Switzerland GmbH and Align Technology BV (herein referred to together as ‘Align’) make removeable orthodontic appliances used to correct misaligned teeth (Aligners). Align treated its supplies of Aligners as VAT exempt as supplies of dental prostheses within Items 2 and 2A of Group 7, Schedule 9, VAT Act 1994. HMRC considered that Aligners were not dental prostheses, and that supplies of Aligners should accordingly be standard rated. On appeal, the First-tier Tribunal (FTT) concluded that the word ‘prosthesis’ can include devices that improve bodily function, and that VAT exemption for the supply of Aligners would be consistent with the objectives of the exemption and allowed Align’s appeal. The Upper Tribunal (UT) has allowed HMRC’s appeal on the basis that the FTT erred in its interpretation of the phrase ‘dental prostheses’ and thereby misapplied VAT Act 1994.

In considering the points around statutory construction, dictionary definitions, and case law on the meaning of a ‘prosthesis’ and ‘dental prostheses’, and reviewing the EU VAT Committee Guidelines and relevant Working Paper, the UT concluded that ‘dental prostheses’, as used in the exemption, means “artificial items which replace missing or damaged teeth. They do not include the Aligners”. The UT set aside the FTT decision and HMRC’s appeal was allowed. (Contact: Phil Simmons)

UK-Switzerland Free Trade Agreement

On 13 July 2026, the UK and Switzerland announced the conclusion of negotiations on an enhanced Free Trade Agreement (FTA), following just over three years of talks. Read more on what the UK-Switzerland FTA means for businesses in Deloitte’s insights article.

EMEA Dbriefs webcasts

The next EMEA Dbriefs webcast will take place on Thursday 23 July 2026 at 12.00 BST/13.00 CEST. In The UK’s new International Controlled Transactions Schedule: what do you need to know?, we’ll cover the international controlled transaction schedule (ICTS), a new UK transfer pricing requirement from 1 January 2027. Our panel will discuss which businesses are expected to be within the ICTS’s scope, the transactional information to be reported, the reporting of different types of transactions, special rules for regulated banks, and the areas covered by HMRC’s consultation.