The Budget was relatively quiet on corporate tax. That reflects the Government’s Corporate Tax Roadmap (the Roadmap), which, while not part of the formal manifesto, has set an expectation for stability in the corporate tax system. Given the unprecedented uncertainty in the run-up to the Budget, businesses will welcome the commitment the Government was able to offer in this respect.

Reflecting on the major cornerstones of the Roadmap, there were no changes to the main rate of corporation tax which remains at 25% and the small profits rate at 19%. The generosity of the R&D tax credits regime has been preserved and the Government is introducing an advance clearance programme to provide greater certainty on complex R&D claims.

Capital allowances

The Government reiterated its commitment to full expensing for qualifying main pool expenditure, alongside the £1m Annual Investment Allowance and the Structures and Buildings Allowance. While the Roadmap signalled it would “maintain Writing Down Allowances”, the depreciation rate has reduced from 18% to 14%. This change is expected to raise additional revenue for the Government, part of which funds a new 40% First Year Allowance (FYA). The new 40% FYA will extend first-year relief to certain leased assets and to unincorporated businesses that previously could not benefit from first-year allowances, widening access to upfront relief on qualifying spend.

Advance Tax Certainty Service

Delivering on another key pledge of the Roadmap, the Government will launch an Advance Tax Certainty Service in July 2026. HMRC will issue binding views on specific points of tax law to provide upfront certainty for major UK investment projects meeting a £1bn expenditure threshold on fixed and intangible assets.

Further detail is expected to be published about how the regime will be formulated in terms of the nature of the capital spend, how the investment is structured and where the investment sits in relationship to the tax uncertainty. Clearances may cover corporation tax, VAT, stamp taxes, PAYE and the Construction Industry Scheme. However, HMRC will not provide clearances on transfer pricing (covered by advance pricing agreements) or matters turning on purpose-based tests, including the unallowable purpose test. On the latter, HMRC has instead indicated that it might be willing to state whether a scenario presents a low risk of future compliance intervention.

Transfer pricing

The Government will move forward with reforming UK law in relation to transfer pricing (TP), Permanent Establishments (PEs), and Diverted Profits Tax (DPT). Many of the changes were covered in a Spring 2025 consultation (which included draft legislative changes and supporting documents), including the following.

• An update to the participation condition, which sets out when parties are considered to be related or acting in such a way that necessitates the application of TP rules and the arm’s length standard. This will now cover arrangements with common management or where otherwise independent parties’ objectives are closely aligned.
• The repeal of UK-to-UK TP requirements where there is no risk of tax loss to the Treasury.
• Confirmation that implicit guarantees can be taken into account for the transfer pricing of intragroup loan arrangements.
• Confirmation that the arm’s length price will be the valuation standard for cross-border transactions of intangibles between related parties, while a single valuation standard, the market value, will apply for all other transactions.
• More closely aligning the UK definition of “PE” to that set out in the OECD Model Tax Convention (with corresponding updates to the Investment Manager Exemption (IME) so that it is retained under the new definition).
• The DPT will be repealed and replaced with a new charging provision for “Unassessed Transfer Pricing Profits” within the UK corporation tax regime.

One notable omission to the expected reforms is that plans to bring medium-sized businesses into the scope of TP rules have been shelved. While small and medium enterprises remain exempt from UK rules, it is important to remember that taxpayers may still have obligations under the TP legislation of other countries where they have cross-border transactions.

Significant new transfer pricing reporting requirement: the International Controlled Transactions Schedule

Of all the proposed TP measures, the introduction of the annual International Controlled Transactions Schedule (ICTS) is expected to have the greatest impact on taxpayers. In-scope multinationals will be required to report cross-border related party transactions in a standardised format (i.e. the ICTS) on an annual basis. While a draft ICTS was included in the Spring 2025 consultation, further technical consultations are planned for Spring 2026 before the final version is agreed.

It is expected that the ICTS filing requirement will take effect for accounting periods beginning on or after 1 January 2027. Those in scope will likely be defined as UK resident businesses (or a UK PE) which have cross-border transactions totalling in excess of a specified threshold (£1m was suggested in the Spring 2025 consultation).

This new obligation marks a substantial increase in compliance requirements, with the Government estimating that around 75,000 taxpayers will be affected. The ICTS is also expected to boost tax revenues, with additional collections forecast to rise from £105m in 2027/28 to over £350m by 2030/31.

Share re-organisation rules

This measure replaces the existing rule that a share for share exchange can proceed on a tax neutral basis provided the transaction is undertaken for genuine commercial reasons and the avoidance of tax is not a main purpose of the transaction of which the share exchange forms part.

The Budget adds a new targeted anti-avoidance rule (TAAR) that applies where a person has entered into arrangements relating to a share exchange and the main purpose, or one of the main purposes, of those arrangements is to obtain a tax advantage. The amendment takes effect immediately for arrangements entered into on or after 26 November 2025.

This development appears to be a response to the outcome of the Euromoney share exchange case, which HMRC lost in the Court of Appeal. In that case, Euromoney contended that, although the inclusion of preference shares in the arrangements was intended to prevent a chargeable gain from arising on the sale, the main purposes of the arrangements as a whole (which involved a commercial sale of shares to a third party) was not tax avoidance.

Stamp taxes: new listings exemptions

Transfers of securities that are listed on a UK regulated market on or after 27 November 2025 will not be subject to 0.5% stamp duty reserve tax (SDRT) charge for a period of three years beginning with the listing. The exemption applies not only to shares, but also to other types of security, such as depositary interests.

The changes apply to listings on the London Stock Exchange’s Main Market. The exemption does not apply to transfers of shares admitted to AIM or the AQSE Growth Market, which are already completely exempt from SDRT. The exemption does not extend to the 1.5% SDRT charge on transfers into depositary receipt systems or unelected clearance services, nor does it apply where the transfer is part of a merger or takeover that results in a change of control.

The Government hopes that the new exemption will help to secure higher initial valuations and liquidity by encouraging trading, and to incentivise UK and foreign companies to list in the UK.