Business Tax Briefing

Finance Act 2026 – Royal Assent

The remaining Lords stages of Finance (No. 2) Bill 2024-26 took place on 17 March 2026. The Lords do not amend Finance Bills, and so the Bill was approved unamended from the version passed by the Commons on 11 March 2026.

The Bill received Royal Assent on 18 March 2026 and has now become Finance Act 2026. It is expected that the text of the Act will be published shortly on legislation.gov.uk.

HMRC publish consultation on reporting payments between close companies and participators

On 19 March 2026, HMRC published a consultation titled Reporting company payments to participators. In line with the government’s announcement at Budget 2025, the consultation explores proposals to mandate the reporting to HMRC of transactions between close companies and their participators. HMRC are seeking views on the scope of the transactions to be included and the information that would need to be reported, including the format and timing of submissions. The call for evidence closes on 10 June 2026.

HMRC publish call for evidence on small and medium-sized businesses’ systems integration

On 12 March 2026, HMRC opened a new call for evidence titled Business Systems Integration. The call for evidence explores how small and medium-sized businesses keep records, the integration of digital systems used by businesses for sales and their accounting software or business bank accounts, and any challenges or difficulties relating to the set-up and use of integrations. The intention is to gather views on the role business systems integration could play in making it easier for businesses to keep records, and identify how the government can support better uptake and availability of integrations between the systems businesses already use. The government does not anticipate introducing requirements for businesses to integrate their systems. The call for evidence closes on 4 June 2026.

HM Treasury publishes call for evidence on the reform of advance corporation tax

In 1999, advance corporation tax (ACT) was abolished, and a mechanism introduced to allow businesses with 'unrelieved surplus ACT' balances to obtain relief against corporation tax in subsequent accounting periods in certain circumstances. This mechanism, inter alia, introduced the ‘shadow ACT rules’, which were designed to limit the amount of relief a business could obtain to pre-abolition rates.

In line with the government’s announcement at Budget 2025 that it would consult on the future of the remaining ACT regime in early 2026, HM Treasury has published a call for evidence exploring its potential abolition from April 2029. As previously reported (see previous Business Tax Briefing), the shadow ACT rules are to be repealed for accounting periods ending on or after 1 April 2026.

Chancellor announces upcoming roadmap for future fiscal devolution

On 17 March 2026, in the course of her Mais Lecture, Chancellor of the Exchequer Rachel Reeves MP announced that the government would develop a “roadmap for future fiscal devolution”, to be published at Budget 2026. According to an associated press release, the roadmap will set out “plans to give regional leaders control of how they allocate a share of some national taxes…, looking at income tax alongside other taxes.” The reforms will be fiscally neutral and “focused on sharing and retaining a portion of existing revenues, with the proceeds of growth benefiting the places that generated that growth, while managing volatile receipts both for local areas and for the Exchequer.”

Construction Industry Scheme regulations

On 12 March 2026, HMRC made The Income Tax (Construction Industry Scheme) (Amendment) Regulations 2026. The regulations, which come into force on 6 April 2026, are intended to simplify aspects of the administration of the Construction Industry Scheme (CIS). They exempt payments made to local authorities or certain public bodies from the scope of the CIS, allowing an existing Extra Statutory Concession to be removed. The regulations also reinstate the requirement, removed in 2015, for construction contractors to file nil returns in tax months where no subcontractors have been paid, unless HMRC have been notified in advance. A technical consultation on the regulations was held in January 2026.

HMRC publish transfer pricing and diverted profits tax statistics 2024-25

HMRC have published the latest annual update in their series transfer pricing and diverted profits tax statistics, covering the twelve months to 31 March 2025. The transfer pricing yield – which includes additional tax revenue from transfer pricing enquiries, Advance Pricing Agreements (APAs), Advance Thin Capitalisation Agreements (ATCAs), and transfer pricing Mutual Agreement Procedure (MAP) cases – was £3.4 billion in 2024-25 (2023-24: £1.8 billion). 143 transfer pricing enquiry cases, including real-time interventions, were settled in 2024-25 and the average age of a settled enquiry was 41.0 months.

The net amount received in respect of diverted profits tax (DPT) notices was £94 million in 2024-25 (2023-24: £108 million), with an estimated £1.8 billion of additional tax (primarily corporation tax) arising from transfer pricing-settled investigations into diverted profits (2023-24: £117 million). HMRC state that they are currently carrying out around 53 reviews into multinationals in relation to potentially diverted profits, including those which have registered under HMRC’s Profit Diversion Compliance Facility (PDCF). 17 cases were resolved under the PDCF in 2024-25.

EMEA Dbriefs webcasts

The next EMEA Dbriefs webcast will take place on Tuesday 24 March 2026 at 13.00 GMT/14.00 CET. In Pillar Two – Unexpected Pillar Two liabilities in M&A transactions, hosted by Anthony Stobart, our panel will discuss the increasing prevalence of Pillar Two in M&A transactions and the potential for unexpected top-up tax liabilities to arise. The panel will discuss key features of the calculation of top-up tax on a jurisdictional basis and a stand-alone basis, why this can lead to unexpected top-up tax liabilities, practical scenarios, and how businesses can protect themselves against unexpected liabilities.