UK Autumn Budget 2025 – International

The unveiling of this year’s Autumn Budget followed an unprecedented level of speculation on the potential “smorgasboard” of tax raising measures to be introduced by Chancellor Rachel Reeves to rebalance the UK’s fiscal gaps and high borrowing costs. Whilst much of the attention was focussed on impacts to individual purses, the Budget revealed positive measures for businesses, including a new UK Listing Relief from Stamp Duty Reserve Tax and investment incentives into scaling companies. The government stuck to its previous commitments to retain the 25% main rate of UK corporation tax and improve advance certainty on R&D tax relief claims, alongside the pursuit of other proposals and measures outlined in the Corporate Tax Roadmap published in October 2024. From a capital allowances perspective, full expensing for plant and machinery has also been maintained, with a new first year allowance of 40% for main-rate assets being introduced from 1 January 2026. There was welcomed news in proposed simplification and global alignment in transfer pricing, Permanent Establishments and Diverted Profits Tax, the details of which should follow in the Finance Bill 2025-26. The detail of the proposed schedule reporting cross-border related party transactions will be closely monitored during consultation in Spring 2026.

The key international related announcements are as follows.

 

UK Listing Relief from Stamp Duty Reserve Tax

The government is introducing a new 3-year exemption from the Stamp Duty Reserve Tax (SDRT) for companies newly listed on a UK-regulated market to boost inbound investment. This will be of interest to businesses considering the UK as an appropriate holding company regime with a view to listing.

The period of exemption applies from the listing of the company’s shares and, once in the post-listing period, will apply to all the company’s securities (not just shares). It will also apply to depository interests over a company's securities where those interests are newly listed. It will not, however, apply to transfers subject to the 1.5% SDRT charge (such as transfers to depository receipt systems) or transfers forming part of a merger or takeover involving a change of control.

The exemption will be effective for agreements to transfers made on or after 27 November 2025, where shares of the relevant company are newly listed on or after this date.

 

Capital Allowances: Writing-Down Allowances

The yearly writing-down allowance for main pool plant and machinery will reduce from 18% to 14% for Corporation Tax effective 1 April 2026. However, the Budget introduces a new 40% first-year allowance (FYA) for main rate expenditure, which includes expenditure made on assets for leasing and by unincorporated businesses, from 1 January 2026. This is intended to encourage investment outside existing FYAs by accelerating relief in the year of investment for businesses (such as for leasing providers) who were previously unable to access this additional support. There are exclusions for overseas leasing, second-hand assets and cars.

Additionally, 100% FYAs for qualifying expenditure on zero emission cars and plant and machinery for electric vehicle charging points have been extended for a further year. The allowance will now remain until 31 March 2027.

 

Transfer Pricing: International Controlled Transaction Schedule

The government has confirmed that it will introduce legislation empowering HMRC to require in-scope multinationals to file an annual International Controlled Transactions Schedule (ICTS) that will include detailed information on cross-border related party transactions. This measure was first announced in the Spring 2025 consultation, which included a draft template of the proposed form.

Regulations will confirm the design of the ICTS, including the specified transactions to be reported and the commencement date. The expectation is that this obligation will take effect for accounting periods beginning on or after 1 January 2027 and will only apply to multinational enterprises which have cross-border dealings in excess of a specified threshold (GBP1 million was suggested in consultation).

The government expects the ICTS to create a significant administrative burden with approximately 75,000 taxpayers estimated to be affected. Interestingly, the government consulted on a similar idea in 2021 (an 'International Dealings Schedule'); however, the idea was dropped due to the anticipated administrative burden placed on taxpayers. It will be interesting to see how HMRC will manage these concerns when drafting the new ICTS regulations. Technical consultation on its design will take place in Spring 2026.

 

Reforms to the UK’s Rules on Transfer Pricing, Permanent Establishments and Diverted Profits Tax

The government will move forward with reforming UK law in relation to transfer pricing, Permanent Establishments (PEs) and Diverted Profits Tax (DPT). These reforms have been under consultation since 2023 and were most recently included in the Spring 2025 consultation, which published draft legislation and supporting documents.

The proposed changes include:

• simplifying the UK transfer pricing rules, including the removal of UK-to-UK transfer pricing;
• aligning the UK definition of ‘PE’ to the latest international consensus and updating the Investment Manager Exemption; and
• replacing DPT with a new charging provision for Unassessed Transfer Pricing Profits (UTPP) within the UK corporation tax regime.

The changes will be included in the Finance Bill 2025-26 and will apply to chargeable periods beginning on or after 1 January 2026.

 

Creative Industries and R&D Expenditure Credits: Intra-group Payments for Surrendered Relief

Legislation is being introduced to clarify that intra-group payments made in return for surrendered Research & Development Expenditure Credit (RDEC), Audio-Visual Expenditure Credit (AVEC) and Video Games Expenditure Credit (VGEC) are not required to be brought into account for Corporation Tax purposes. However, payments are only ignored if they exceed the amount of the credit surrendered. This will come into effect for payments made on or after 26 November 2025.

 

Advanced Tax Certainty Consultation

Following a consultation which ended in June, the government has published a response confirming that it plans to introduce a new “Advance Tax Certainty” service, launching in July 2026, to provide clearances in relation to the tax treatment of investments in “major projects” in the UK. Clearances will be available in relation to corporation tax, VAT, stamp taxes, PAYE and the Construction Industry Scheme, but will not extend to transfer pricing, anti-avoidance purpose tests or hypothetical structures. Any clearance granted is intended to bind the government against changing its interpretation of the law, but not a change in law. The service will initially only apply to projects with a value of at least GBP1 billion, but this may be revised downward as part of a more general review of the service after 12 months.

Should you have any queries on the UK Autumn Budget, please reach out to your usual UK tax contact or one of the following: