2 October 2026
Updated version of OECD model tax treaty released
On 30 September 2026, the OECD published an updated version of the OECD Model Tax Convention on Income and on Capital (‘OECD model tax treaty’). The new version, the 2025 version, updates the previous 2017 version of the OECD model tax treaty to incorporate the changes previously agreed and published by the OECD in November 2025. These updates notably include the additions to the commentary to Article 5 on the definition of a ‘fixed place of business’ permanent establishment in situations of cross-border remote working. The document published is the ‘full version’ of the OECD model tax treaty. A corresponding ‘condensed version’ is expected to be published in due course. Read more on Deloitte tax@hand.
Mandatory payrolling of benefits in kind: excluding globally mobile employees
HMRC have updated their draft interim guidance on mandatory payrolling of benefits in kind and expenses to confirm that employers will be able to voluntarily exclude ‘globally mobile employees’ from the mandatory reporting requirements that will apply from 6 April 2027 through a new service that will be available from November 2026. Employers should continue with existing year-end reporting arrangements for these employees using forms P11D and P11D(b).
Upper Tribunal dismisses HMRC’s appeal in cabin crew accommodation case
The Upper Tribunal (UT) has dismissed HMRC’s appeal in the employment taxes case HMRC v British Airways PLC. The case concerns the treatment of accommodation provided for cabin crew at Heathrow for the purposes of income tax and National Insurance contributions (NICs). The cabin crew were engaged on a particular flight rotation known as a back-to-back and were provided with accommodation at Heathrow in the middle of the rotation (the Accommodation). HMRC’s view was that this Accommodation was a taxable benefit that did not fall within the rules for deductions in sections 336 to 338 ITEPA 2003, because the crew members were not performing their duties whilst they were resting in the Accommodation and it was not necessary for the Accommodation to be provided at the employees’ home base (being Heathrow).
In 2025, the First-tier Tribunal (FTT) allowed British Airways’ appeal on the basis that the expenditure was deductible under section 337, or in the alternative section 338 or 336. The UT has upheld the FTT’s decision that section 337 applies. In light of the contractual and regulatory requirement for the crew members to stay in the Accommodation, the UT agreed that it was necessary for the crew members to stay in the Accommodation and that they did so in the performance of their duties. Furthermore, the Accommodation was “necessarily incurred” on travelling in the performance of the duties of the employment. As a result, the employees were entitled to deduct the cost of the Accommodation for income tax and NICs purposes.
HMRC publish latest research and development tax credits statistics
On 29 September 2026, HMRC published the latest in their annual series of research and development (R&D) statistics: Research and Development Tax Credits Statistics: September 2026. The publication includes provisional statistics for R&D claims covering accounting periods ending in the 2024/25 tax year. This year’s publication is the first to include statistics for the new merged research and development expenditure credit (RDEC) and enhanced R&D intensive support (ERIS), which were introduced for accounting periods beginning on or after 1 April 2024.
Compared to the previous year, the provisional estimated amount of total R&D tax relief claimed increased by 5% to £8.2 billion, with R&D expenditure increasing by 7% to £51.0 billion. While the amount of relief claimed through the small or medium-sized enterprise (SME) and ERIS schemes is estimated to have fallen by 29% compared to the previous year to £2.3 billion, relief claimed through the RDEC and merged RDEC schemes increased by 29% to £5.9 billion. HMRC estimate a 17% decrease in the total number of R&D claims for 2024/25 to 40,325, driven by a 19% decrease in claims by SMEs.
EU customs reform enters into force
The European Commission announced that the EU customs reform has come into force, following its publication in the Official Journal of the European Union. The reform is intended to modernise the EU customs system, with a new Union Customs Code (UCC) and the establishment of the EU Customs Authority (EUCA). The new UCC provides the legal basis for the reform, which the Commission describes as recasting “the legal architecture governing customs operations across the EU, creating a more integrated system, and helping the Customs Union to operate as one”. The EUCA is tasked with developing the EU Customs Data Hub, which will be a single EU trade interface for imports and exports (replacing existing national and EU IT systems) and will allow for the exchange of information between customs authorities, leading to reduced costs for businesses and for EU Member States. The EUCA is expected to start operations in 2027, with the Customs Data Hub becoming mandatory for e-commerce consignments from 1 July 2028, and extending to other trade by 2031. The UCC also establishes an EU-wide handling fee for goods sold in distance sales and released for free circulation in the EU, which will apply from November 2026. The Commission also published a draft delegated regulation setting the amount of the Union handling fee at €2 per item. This is in addition to the temporary €3 customs duty applied from 1 July 2026. (Contact: Sam Kiely)
EMEA Dbriefs webcasts
As a reminder, the next EMEA Dbriefs webcast will take place on Tuesday 6 October 2026 at 12.00 BST/13.00 CEST. In Leading the future of tax with AI, hosted by Frankie Jell, we will consider what the tax function will look like in 2030, and what leaders should be doing today to prepare. We will discuss the rise of agentic compliance; the future of tax administrations, including digital audits, real-time reporting, e-invoicing and machine-to-machine interactions between taxpayers and authorities; how leading organisations are reimagining the tax operating model; the future of the tax workforce; the use of data, AI and emerging technologies to provide strategic business insights; and practical actions tax leaders can take now.