23 October 2026
Budget next week
A reminder that the Chancellor of the Exchequer, John Healey MP, will present his Budget next week on Wednesday 28 October 2026. This will be accompanied by an update from the Office for Budget Responsibility (OBR) on the latest state of the country’s finances. The Budget will provide an early indication of how the government intends to translate its growth and regional development priorities into fiscal and tax policy. For insights on the Budget announcements, visit our Budget 2026 page.
There will be an EMEA Dbriefs webcast on Thursday 29 October 2026 at 12.00 GMT/13.00 CET, hosted by Amanda Tickel, Deloitte’s Global Leader of Tax and Trade Policy, during which our panel of specialists will provide an update on the previous day’s announcements and their implications for businesses and individuals.
Jersey’s Multinational Corporate Income Tax – first filing deadline of 31 December 2026
Jersey has introduced a new domestic corporate tax, the Multinational Corporate Income Tax, or MCIT, for accounting periods commencing on or after 1 January 2025. MCIT is charged at a rate of 15% and applies to Jersey Constituent Entities of MNE groups that are in scope of Pillar Two. The tax is calculated in a similar (but not identical) manner to that set out in the OECD Model Rules for GloBE income. Entities that are subject to MCIT are taken outside the scope of the standard Jersey corporate income tax regime.
MCIT returns are required to be filed in Jersey 12 months after the end of the fiscal year to which they relate. This means that first MCIT return filings (i.e. for MNE groups with a December year end) should be made by 31 December 2026.
Supreme Court allows HMRC’s appeal on the deductibility of redress payments
The Supreme Court has unanimously allowed an appeal by HMRC in ScottishPower (SCPL) Limited and others, concerning the corporation tax deductibility of payments made pursuant to settlement agreements with regulators. The taxpayers, regulated by the UK energy regulator, Ofgem, entered into agreements in settlement of a number of regulatory investigations. They paid penalties in nominal amounts, together with agreed ‘redress’ payments to consumers, consumer groups and charities totalling approximately £28 million. The Upper Tribunal (UT) agreed with HMRC that none of the disputed expenditure was deductible. It considered that the principles established in case law, such as Von Glehn and McKnight, denying trading deductions for penalties or fines incurred under a statutory regime even when incurred in the course of trading activities, applied to all expenses which have the nature or character of a penalty. The Court of Appeal (CA) disagreed, holding that these principles did not to extend to amounts which are not, in fact, fines or penalties, and that in its view there was nothing else in law preventing their deductibility as trading expenses.
The Supreme Court has allowed HMRC’s appeal. The Court first considered precisely why penalties are not deductible for corporation tax purposes. It rejected an analysis that the non-deductibility of penalties arises from a separate ‘judge-made rule’. Instead, the Supreme Court held that penalties are non-deductible because they are not incurred “wholly and exclusively for the purposes of the trade” and thus are disallowed by section 54(1)(a) of the Corporation Tax Act 2009. The Court stated that a taxpayer’s purpose in making a payment of a penalty is “to satisfy a legal obligation which arises usually under statute to punish the taxpayer for infringing rules which bind him in the conduct of his trade” and that that is a purpose which “on the true construction of section 54(1)(a), is not a purpose of the trade.” Applying this revised reasoning to the redress payments, in the Court’s view, the payments were sufficiently similar to penalties for it to be clear that they also were not expenditure incurred for the purposes of the taxpayers’ trades. Rather, they were made to avoid the imposition of substantial penalties. The Supreme Court also agreed with the UT that payments to customers could not be treated separately from the other payments under the settlement agreement, as they formed part of the package negotiated as an overall deal.
First-tier Tribunal: pre-2009 dividend double tax relief claims following FII GLO etc.
A number of judgments in recent years, such as the Supreme Court’s judgment in July 2021 in FII Group Litigation, clarified the principles in applying EU law to, and conforming interpretations of, the UK’s double tax relief rules to certain overseas dividends received by UK companies prior to 1 July 2009. In 2021 and 2024, the First-tier Tribunal and Upper Tribunal (UT) gave decisions (the Post Prudential Closure Notice Applications/Appeals group litigation case) dealing, inter alia, with follow-up questions of what procedures must have been followed by affected taxpayers, in particular what constituted a valid claim for double tax relief for underlying tax (at the rate established by the courts for the appropriate level of relief under EU law). A wide range of questions was posed, reflecting the variety of circumstances of test claimants. In February 2025, the Court of Appeal (CA) handed down its judgment, agreeing with HMRC in respect of each of the appealed issues. The CA remitted the case back to the First-tier Tribunal (FTT) to make the detailed decisions required in respect of the individual appeals and closure notice applications in accordance with the CA’s conclusions.
The FTT has now issued its decision, including determining an outstanding issue in Test Case 7 concerning the carry forward of double tax relief credits. The issue was whether, where a company had made an in-time claim in Year 1 but management expenses had already reduced its tax liability to nil, a further claim was required before the carried-forward double tax relief credits could be utilised in a later year. The FTT held that the double tax relief credits carried forward automatically and, in the absence of any machinery for doing so, no further claim was necessary.
The FTT has also issued its decision in the related case Baillie Gifford China Growth Trust PLC (BGCG), in which the Tribunal considered an issue relating to the carry forward of double tax relief credits and section 806(2) ICTA 1988. In BGCG, HMRC abandoned their previous position that the section 806(2) claims were invalid by reason of being premature. The FTT concluded that the claims must extend to the full amount of double tax relief to which BGCG was entitled in respect of those dividends previously returned as exempt, and not, as HMRC argued, that double tax relief applies only to that income not covered by management expenses.
The judgments will be of particular interest to companies with outstanding claims in connection with the various cases (including FII GLO, CFC/Dividend GLO, BAT or Prudential) and section 79 TIOPA 2010, section 806(2) ICTA 1988, or Paragraph 51 Schedule 18 FA 1998 claims in respect of historical overseas dividends. (Contact: Bryan Flint)
UK Carbon Border Adjustment Mechanism – calculation of liabilities
The UK Carbon Border Adjustment Mechanism (CBAM), which will place a carbon price on specified goods imported into the UK, will come into effect on 1 January 2027. The government has announced the publication of information regarding the calculation of CBAM liabilities. Illustrative CBAM rates and worked example for CBAM sets out illustrative sector-level CBAM rates that would apply from 1 January 2027. The information is intended to help businesses understand how future rates will be set, and to provide businesses with an initial indication of potential CBAM costs. The official CBAM rates for Q1 2027 will be published before the end of the year, and then on a quarterly basis. Check the default values for the CBAM sets out the default emissions values, expressed in tonnes of carbon dioxide equivalents (tCO2e) per good. The values can be used where the importer is not able to determine actual emissions. A trade-weighted average default value has been published per 8 digit commodity code, and data from the EU is excluded. The government explains that this reflects the UK and EU commitment to link their emissions trading schemes and the expectation that EU-origin goods will ultimately be exempt from UK CBAM. A 10% mark-up has been applied to all sectors except fertilisers. The default values will apply for 2027 and 2028, with the government committing to introduce country-specific default values from 2029. (Contact: Zoe Hawes)
EMEA Dbriefs webcasts
An EMEA Dbriefs webcast will take place on Tuesday 3 November 2026 at 14.00 GMT/15.00 CET. In Cross-border workforce mobility across Germany and the Benelux: key rules, risks and emerging trends, we will consider the new challenges arising for both employees and employers managing tax, payroll, social security, and other obligations across multiple jurisdictions, as cross-border working has become a permanent feature of the modern workforce. Our panel of specialists from Germany, Belgium, Luxembourg, and the Netherlands will use real life-scenarios to explore early risk identification, strengthening governance processes and supporting a compliant cross-border workforce.
On Wednesday 4 November 2026 at 12.00 GMT/13.00 CET, Kunal Patel will be hosting The future of employment tax: taking action on global trends for reward & HR. In the webinar we will consider the rapid transformation of the global employment taxes landscape. We will explore the shift towards digital and real-time reporting, and enhanced tax authority data capabilities; increased scrutiny and enforcement from tax authorities, including advanced data analysis and AI; the growing regulatory focus on contingent workers; addressing the complexities of Benefits-in-Kind reporting; and leveraging technology to build robust, tech-enabled employment tax functions for oversight and compliance.