12 December 2025
Budget 2025
The Chancellor of the Exchequer, Rachel Reeves MP, delivered her Budget on Wednesday 26 November 2025. Analysis of the tax announcements can be found on our dedicated Budget website, including our commentary on individual measures. A recording of our EMEA Dbriefs webcast on the Budget is available to watch on demand.
At Budget 2025, the government stated its intention to announce “further changes to simplify and improve tax and customs administration at a Tax Update in early 2026.”
Finance Bill and National Insurance Contributions Bill published
The text of Finance (No. 2) Bill 2024-26 was published on 4 December 2025, together with its Explanatory Notes. The Bill had its First Reading in the House of Commons on 2 December 2025 following the conclusion of MPs’ debate on the Budget and their approval of the Budget’s Ways and Means Resolutions. The Bill’s Second Reading is scheduled to take place on 16 December 2025.
The government has also published the National Insurance Contributions (Employer Pensions Contributions) Bill, together with its Explanatory Notes. The Bill will create a power for the Treasury to apply NICs to salary-sacrificed pension contributions that exceed £2,000 per annum from April 2029. The Bill had its First Reading in the House of Commons on 4 December 2025 and its Second Reading is scheduled for 17 December 2025. HMRC have confirmed in a Tax Information and Impact Note (TIIN) that details on the design and operation of the £2,000 contribution limit will be set out in secondary legislation, following stakeholder engagement.
Reforms to transfer pricing, permanent establishments, and Diverted Profits Tax legislation
Finance (No. 2) Bill 2024-26 contains reforms to the UK’s transfer pricing, permanent establishments and Diverted Profits Tax legislation. The changes are, in most cases, due to take effect for accounting periods commencing on or after 1 January 2026. The Finance Bill also includes primary legislation to enable HMRC to introduce a new transfer pricing reporting requirement from 2027: the ‘International Controlled Transactions Schedule’. For more details, please see our alert here.
HMRC publish interim guidance on changes to capital gains anti-avoidance provisions
HMRC have published a new appendix to their Capital Gains Manual (CG-APP19) setting out provisional guidance on changes, announced at Budget 2025, and which took immediate effect on 26 November 2025. The appendix also sets out HMRC’s approach to statutory clearances, including cases where subsequent changes are made to a transaction, or where a clearance was submitted prior to 26 November 2025, but no decision has yet been received.
HMRC publish guidance on share reorganisations and non-UK mergers
HMRC have also published a new page in their Capital Gains Manual (CG52502) setting out their view on how certain corporate reorganisation provisions might apply in the context of international mergers. A common issue is whether the conditions of section 135 Taxation of Chargeable Gains Act 1992 (TCGA 1992) are met where there is not a simple exchange of shares (e.g. because another step or company is involved in a merger). According to the new guidance, HMRC’s view is that section 135 TCGA 1992 is capable of applying (subject to meeting the necessary conditions, including new anti-avoidance provisions covered above) where the issuing company acquires the full benefit of the shares previously held by the original shareholders and where the overall effect of the transaction is the same as if those shares had been acquired directly, as would happen under UK company law. The guidance notes that a similar approach is taken where section 136 is in point.
Remote working permanent establishments and other updates to the OECD Model Tax Convention
The OECD has published approved updates to the OECD Model Tax Convention on Income and on Capital (the OECD Model Treaty). The updates include changes to the OECD Model Treaty’s commentary on the definition of a ‘fixed place of business’ permanent establishment in situations of cross-border remote working, in particular home working. The commentary has also been updated to include new alternative additional model treaty rules, previously consulted upon in 2024, which countries could use in relation to taxation rights over the exploration and exploitation of extractible natural resources. The updates will be incorporated into a revised version of the OECD Model Treaty that will be published “in the next few months.” For further details, and other OECD Model Treaty updates, please see our alert.
OECD releases consultation on global mobility of individuals
The OECD Inclusive Framework has published a scoping consultation document on the effect of global mobility of individuals on the international tax framework. The consultation asks for feedback and evidence to inform the agenda for the next phase of the OECD Inclusive Framework’s work in this area, covering personal tax, employment tax and corporate tax issues. The consultation also encourages businesses to make suggestions as to how the international tax framework, including domestic legislation and double tax treaties, could deal with the challenges raised by global mobility. The consultation closes on 22 December 2025.
OECD publishes report on effective carbon rates
The OECD has published its annual report on Effective Carbon Rates 2025: Recent Trends in Taxes on Energy Use and Carbon Pricing. The report covers 79 countries, collectively accounting for approximately 82% of global greenhouse gas (GHG) emissions. The report examines governments’ use of effective carbon rate (ECR) instruments including carbon taxes, emissions trading systems (ETSs), and fuel excise taxes. According to the report, carbon taxes and ETSs are in place in over 50 countries. 44% of GHG emissions from the 79 countries covered were subject to an ECR instrument (i.e., a carbon tax, a carbon price from an ETS, a fuel excise tax, or a combination of these) in 2023, compared to 33% of emissions in 2018. The report states that “Fuel excise taxes remain the most used ECR instrument, covering 24% of emissions, versus 5% for carbon taxes and 22% for ETSs.”
EMEA Dbriefs webcasts
The EMEA Dbriefs programme is taking a brief break now for the holiday period. If you want to be informed about upcoming webcasts throughout 2026, please subscribe to receive our mailings. In the meantime, you can catch up on demand with any recent webcasts you may have missed, including: Off payroll workforce tax and legal risk; Exit readiness – key tax priorities to be aware of in advance of a transaction; Should payroll be the only constant in a world of change? and Achieving practical transfer pricing certainty through ICAP: Insights and discussion with HMRC.