Monthly Tax Update

‘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 several new consultations and consultation outcomes. Exchequer Secretary to the Treasury, Dan Tomlinson MP, also issued a written ministerial statement.

Draft legislation and new consultations 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.
• 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 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.

Andy Burnham MP becomes UK Prime Minister; tax measures announced

Andy Burnham MP has replaced Sir Keir Starmer MP as UK Prime Minister. In his first speech as Prime Minister, Burnham stated that he would set out measures to help with the cost of living, including how they would be funded. A 10-year plan for Britain will be published later this year. Tax-related cost-of-living measures announced by Burnham include:

• The zero rate of VAT will apply to supplies of domestic electricity from 1 October 2026. Currently the reduced rate of 5% applies. In the press release, the government states that its expectation is that suppliers will pass the VAT reduction on to their customers, including those on fixed tariffs.
• A 20% reduction to business rates bills for pubs, clubs and live music venues (excluding “the very largest live music venues”) in England from 2027/28. According to the press release, the cut is in addition to the business rates relief for eligible pubs and live music venues in England that was announced in January 2026.

Burnham has also announced a devolution package, which will give more powers to English mayors. Further details are included in a Cabinet Statement setting out the government’s vision for devolution in England. As part of the package, mayoral authorities will retain more locally generated revenue, starting with business rates from spring 2027 and followed by a share of income tax revenues from 2028, with further details to be set out in a roadmap at the Budget.

New Chancellor appointed and Budget date confirmed

John Healey MP has been appointed as the new Chancellor of the Exchequer, replacing Rachel Reeves MP. Healey has announced that the Budget will take place on Wednesday 28 October 2026. The Budget will be presented alongside the latest economic and fiscal forecasts commissioned from the Office for Budget Responsibility (OBR).

Other changes to the Treasury ministerial team include Emma Reynolds MP replacing Lucy Rigby KC MP as Chief Secretary to the Treasury. Rigby is now Economic Secretary to the Treasury, replacing Rachel Blake MP. James Murray MP has been appointed Financial Secretary to the Treasury in place of Lord Livermore. Dan Tomlinson MP remains Exchequer Secretary.

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

HMRC have updated their guidance on the extended deadline for corrections to GloBE Information Returns (GIRs) that were submitted by the 30 June 2026 deadline (or 31 July deadline if applicable) but not accepted. 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.

GfC8: Help with VAT compliance controls – new section on temporary reduced VAT rate

HMRC have published a new section (10) of their Guidelines for Compliance 8 (GfC8), Help with VAT compliance controls — GfC8, covering the temporary reduced VAT rate for children’s meals, tickets and family attractions. GfC8 sets out what HMRC consider to be best practice for VAT accounting and compliance processes. The guidelines are intended to support businesses to establish a tax control framework, enabling businesses to identify and assess risk, and put in place appropriate controls to reduce those risks. The new section first sets out the parameters of the temporary reduced rate, which applies from 25 June 2026 to 1 September 2026 (inclusive), and notes that businesses are expected to pass the benefit of the reduction on to customers. The guidelines then set out examples of both risks that may arise and controls that may help businesses reduce the risk of error and support accurate reporting. The guidelines also note that businesses must ensure the correct VAT rate is applied from 2 September 2026.

EMEA Dbriefs webcasts

We have one Dbriefs tax webcast over the next month: Mandatory overseas permanent establishment exemption (20 August 2026). Please visit our Dbriefs website for more information, and to view any other recent webcasts on demand.