Finance (No. 2) Act 2023

First-year allowance for expenditure on electric vehicle charge points

Relief for research and development

Treatment of profits from patents etc: small profits rate of corporation tax

Energy (oil and gas) profits levy: de-carbonisation allowance

Museums and galleries exhibition tax relief: extension of sunset date

Extension of the temporary increase in theatre tax credit etc

Seed enterprise investment scheme: increase of limits etc.

CSOP schemes: share value limit and share class

Enterprise management incentives: restricted shares and declarations

Certain lump sums to be taxed at marginal rate

Money purchase annual allowance

Annual allowance: tapering

Collective money purchase arrangements

Relief relating to net pay arrangements

Payments under Jobs Growth Wales Plus

Power to clarify tax treatment of devolved social security benefits

Qualifying care relief: increase in individual’s limit

Estates in administration and trusts

Transfer of basic life assurance and general annuity business

Certain re-insurance sums not to count as deemed I-E receipts

Insurers in difficulties: write-down orders for corporation tax purposes

Insurers in difficulties: write-down orders in case of pension schemes

Corporate interest restriction

Investment vehicles

Share exchanges involving non-UK incorporated close companies

Records relating to transfer pricing

Double taxation relief: foreign nominal rates

Payments to farmers under the lump sum exit scheme etc

Contracts completed after ordinary notification period

Separated spouses and civil partners

Carried interest: election to pay tax as scheme profits arise

Relief on disposal of joint interests in land

Alcoholic strength

Small producer alcoholic products

Charge on exceptional generation receipts

Chargeable persons

Amount charged by reference to “top-up amounts”

How to calculate top-up amounts and attribute them

Administration of multinational top-up tax

Meaning of “multinational group” and “ultimate parent”

Excluded entities

Responsible members

Qualifying multinational groups

Whether de-merged groups meet the revenue threshold

Effective tax rate

Adjusted profits of a member of a multinational group

Underlying profits as determined for statements of ultimate parent

Underlying profits accounts

No amounts outside of profit and loss account to be included

Profits adjusted to be profits before consolidation adjustments to eliminate intragroup transactions

147A

• (1) The underlying profits of a member of a multinational group, and the covered tax balance of that member (see Chapter 5), are to be adjusted (if necessary) to secure that—

• (a) qualifying refundable tax credits are accounted for as income rather than as tax expense,

• (b) tax credits that are marketable transferable tax credits in relation to the member are accounted for as income rather than as tax expense, and

• (c) other tax credits are accounted for as tax expense rather than as income.

• (2) Section 148 sets out when tax credits are qualifying refundable tax credits.

• (3) Section 148A sets out the meaning of “transferable tax credit” and “marketable transferable tax credit”.

• (4) Sections 148B and 148C set out rules about the value of marketable transferable tax credits.

• (5) Sections 176A to 176C (in Chapter 5) set out rules about the value of tax credits that are not marketable transferable tax credits but which are transferable or were transferred (and which as a result of subsection (1)(c) are generally to be accounted for as tax expense).

• (6) See also sections 176D to 176F which contain special rules for tax credits received in under a tax equity partnership arrangement.

148A

• (1) A tax credit is a transferable tax credit in relation to a member of a multinational group if—

• (a) the member is—

• (i) the person to whom the credit was originally granted (“the originator”), or

• (ii) a person (“a purchaser”) who has acquired the credit (whether from the originator or anyone else), and

• (b) the transferability condition is met in relation to the member.

• (2) A transferable tax credit is a marketable transferable tax credit in relation to a member of a multinational group if—

• (a) it is a transferable tax credit, and

• (b) the marketable condition is met in relation to the member.

• (3) Those conditions are met differently depending on whether the member is the originator or a purchaser.

• (4) The transferability condition is met—

• (a) in relation to the originator if, under the law of the territory in which the credit was granted, credits of that type may be transferred to a person or entity that is not connected with originator before the end of 15 months after the end of the accounting period in which the credit is granted, and

• (b) in relation to a purchaser if, under the law of that territory, credits of that type may be transferred to a person or entity that is not connected with the purchaser—

• (i) under the same or similar conditions as would apply to the originator, and

• (ii) before the end of the accounting period in which it was transferred to the purchaser.

• (5) The marketable condition is met—

• (a) in relation to the originator, if—

• (i) the credit is transferred to a person or entity that is not connected with the originator in the period beginning with the day on which the credit was granted and ending 15 months after the end of the accounting period in which the credit was granted at a price equal to or in excess of 80% of its net present value, or

• (ii) similar credits are traded between persons or entities that are not connected to each other in that period, and are typically traded at a price equal to or in excess of 80% of their net present value, and

• (b) in relation to a purchaser, if the purchaser acquired the credit from a person or entity that is not connected to the purchaser at a price equal to or in excess of 80% of its net present value.

• (6) Subsections (7) and (8) apply for the purposes of determining the net present value of a tax credit.

• (7) In making that determination, assume that the entity that holds it will be able to use it in the accounting periods in which it may be used.

• (8) The discount rate to be used in making that determination is to be determined by reference to the return on debt instruments that are issued by the government of the territory in which the credit was granted—

• (a) that have—

• (i) the same, or a similar, maturity to the period over which the credit is to be used, or

• (ii) in a case in which the credit is to be used over a period exceeding 5 years, a maturity of 5 years, and

• (b) that are issued—

• (i) in relation to a credit that has been transferred, in the accounting period in which the credit was transferred, or

• (ii) in relation to a credit held that has not been transferred, in the accounting period in which it was granted.

• (9) References in subsections (6) and (8) to an accounting period are—

• (a) in relation to determining net present value in connection with determining whether the marketable condition is met by the originator, an accounting period of the originator, and

• (b) in relation to determining net present value in connection with determining whether the marketable condition is met by a purchaser, an accounting period of the purchaser.

• (10) Where a transferable tax credit is also a qualifying refundable tax credit, it is to be treated as not being a transferable tax credit for the purposes of this Part.

148B

• (1) The underlying profits of a member of a multinational group that is the originator in relation to a marketable transferable tax credit are to be adjusted to secure that the value of marketable transferable tax credits it holds, and has held, as originator are reflected as follows.

• (2) Where the credit is not transferred before the end of 15 months after the end of the accounting period in which it was granted, the full value of the credit is to be recognised as income.

• (3) Where the credit is subsequently transferred for consideration which is less than the value of the credit, the difference between the value of the credit and the consideration received for its transfer is to be recognised as a loss in the accounting period in which it is transferred.

• (4) Where the credit is transferred before the end of 15 months after the end of the accounting period in which the credit is granted, the consideration for the transfer (rather than the value of the credit) is to be recognised as income.

• (5) Where the credit has not been transferred, and was not fully used, before its expiry, the value of so much of the credit as has not been used is to be reflected as a loss in the accounting period in which the credit expired.

148C

• (1) The underlying profits of a member of a multinational group that is the purchaser in relation to a marketable transferable tax credit are to be adjusted to secure that the value of marketable transferable tax credits it holds, and has held, as purchaser are reflected as follows.

• (2) On using an amount of the credit in an accounting period, the amount given by subsection (3) is to be recognised as income.

• (3) That amount is the amount given by multiplying—

• (a) the amount used divided by the full value of the credit, by

• (b) the amount given by subtracting the purchase price of the credit from the full value of the credit.

• (4) On transferring the credit, the amount in subsection (5) is to be reflected in the underlying profits for the accounting period in which the transfer occurred—

• (a) if positive, as a gain, or

• (b) if negative, as a loss.

• (5) That amount is the amount given by subtracting—

• (a) the sum of—

• (i) the purchase price of the credit, and

• (ii) any amounts recognised as income in accordance with subsection (2) (whether in that accounting period or a previous accounting period), from

• (b) the sum of—

• (i) the amount of the credit that has been used, and

• (ii) the consideration for the transfer.

• (6) Where the credit has not been transferred, and was not fully used, before its expiry, the amount in subsection (7) is to be reflected as a loss in the accounting period in which the credit expired.

• (7) That amount is the amount given by subtracting—

• (a) the amount of the credit that was used, from

• (b) the sum of the purchase price of the credit and any amounts recognised in accordance with subsection (2).

Attribution of losses between permanent establishment and main entity

Election to use realisation principle

Election to reflect deductions for stock-based compensation

Election to exclude intra-group transactions

Election in relation to hedging currency risk in ownership interests

Underlying profits of hybrids

Certain non tax resident entities to be treated as flow-through entities

Ultimate parent subject to qualifying dividend regime

Application of section 171 to members in the same territory as the ultimate parent

Amount of covered tax balance

Transferable tax credits

176A

• (1) Sections 176B and 176C make provision about “non-marketable transferable tax credits”.

• (2) A tax credit held by a member of a multinational group that is the originator of the credit is a non-marketable transferable tax credit if—

• (a) it may be transferred to another person or entity, and

• (b) it is neither a marketable transferable tax credit nor a qualifying refundable tax credit.

• (3) A tax credit held by a member of a multinational group as a purchaser of the credit is a non-marketable transferable tax credit if it is neither a marketable transferable tax credit nor a qualifying refundable tax credit.

• (4) In this section and in sections 176B and 176C “originator” and “purchaser” are to be construed in accordance with section 148A(1)(a).

176B

• (1) The covered tax balance of a member of a multinational group that holds a non-marketable transferable tax credit as originator is to be adjusted to secure that the value of the credit is reflected as follows.

• (2) The value of the tax credit is to be reflected as it is used.

• (3) If the credit is transferred (after the end of the period of 15 months after the end of the accounting period in which the credit is granted), the consideration for the transfer is to be reflected as a credit in the accounting period in which the transfer occurred.

176C

• (1) The covered tax balance of a member of a multinational group that holds a non-marketable transferable tax credit as purchaser is to be adjusted to secure that the value the credit is reflected as follows.

• (2) On using an amount of the credit, the amount given by subsection (3) is to be reflected as a credit in the covered tax balance for the accounting period in which it is used.

• (3) That amount is the amount given by multiplying—

• (a) the amount used divided by the full value of the credit, by

• (b) the amount given by subtracting the purchase price of the credit from the full value of the credit.

• (4) On transferring the credit, the amount in subsection (5) is—

• (a) if positive, to be reflected as a credit in the covered tax balance for the accounting period in which the transfer occurred, or

• (b) if negative, to be reflected as a loss in the adjusted profits of the member for that period.

• (5) That amount is the amount given by subtracting—

• (a) the sum of—

• (i) the purchase price of the credit, and

• (ii) any amounts recognised ... in the covered tax balance in accordance with subsection (2) (whether in that accounting period or a previous accounting period), from

• (b) the sum of—

• (i) the amount of the credit that has been used, and

• (ii) the consideration for the transfer.

• (6) Where the credit has not been transferred, and was not fully used, before its expiry, the amount in subsection (7) is to be reflected as a loss in the adjusted profits of the member for the accounting period in which the credit expired.

• (7) That amount is the amount given by subtracting—

• (a) the amount of the credit that was used, from

• (b) the sum of the purchase price of the credit and any amounts recognised in accordance with subsection (2).

Tax equity partnerships

176D

• (1) Where—

• (a) a member of a multinational group is an investor in a tax equity partnership arrangement, and

• (b) an election under section 165 (excluded equity gains and losses included) applies in relation to the member for an accounting period,

qualifying flow-through tax benefits provided to the member under that arrangement in that period are to be excluded from the qualifying current tax expense of that member for that period.

• (2) “Flow-through tax benefits” means—

• (a) tax credits, other than qualifying refundable tax credits and marketable transferable tax credits, and

• (b) the value of amounts of tax deductible losses,

that are made available to be used by an investor in a tax equity partnership arrangement under that arrangement (whether or not those credits or losses are used by the investor).

• (3) Section 176E (proportional amortisation method) applies for the purposes of determining the extent to which flow-through tax benefits are “qualifying” where—

• (a) in determining the underlying profits of the investor, the proportional amortisation method is used to account for the arrangement, or

• (b) the filing member of the multinational group of which the investor is a member has elected that section 176E should apply for those purposes in relation to the member and the arrangement.

• (4) Otherwise, section 176F (subtraction method) applies for those purposes.

• (5) For the purposes of this Part, a member of a multinational group is an investor in a tax equity partnership arrangement if—

• (a) the member has made an investment in an entity that is tax transparent in the territory in which the member is located,

• (b) the investment is treated as an equity interest for tax purposes in the territory in which the member is located,

• (c) the investment would, under an authorised accounting standard of the territory in which the entity operates, be treated as an equity interest,

• (d) the entity is not a member of the multinational group, and

• (e) it is reasonable to expect, at the time of making the investment, that the return on the investment would be negative in the absence of the provision of flow-through tax benefits.

• (6) But a member of a multinational group is not to be regarded as an investor in a tax equity partnership arrangement if—

• (a) the investment in the entity does not represent a genuine economic interest in that entity such that the member is exposed to the possibility of a loss on the investment, or

• (b) the territory in which the member is located limits the use of tax equity partnership arrangements to arrangements that involve a multinational group subject to multinational top-up tax or its equivalent under the law of a territory outside the United Kingdom.

• (7) Flow-through tax benefits provided to a member of a multinational group in an accounting period that are not qualifying are to be reflected as a credit in the qualifying current tax expense for that period.

• (8) Flow-through tax benefits (whether qualifying or not) provided to a member of a multinational group are not to be reflected in the underlying profits of that member, even if that would be the effect of the election under section 165.

• (9) For the purposes of subsection (3)(a), the “proportional amortisation method” means a method of accounting under which—

• (a) the initial capital investment in the arrangement is amortised over the term of the investment with the amortisation expense for an accounting period based on the proportion of the flow-through tax benefits expected to be provided over the term of the arrangement that are expected to be provided in that period, and

• (b) the difference between the flow-through tax benefits received in an accounting period and that amortisation expense for that period is reflected as tax expense.

• (10) For the purposes of this section and sections 176E and 176F, the value of an amount of tax deductible losses made available to be used by an investor is given by multiplying that amount by the tax rate that applies to the investor.

• (11) An election under subsection (3)(b)—

• (a) must specify the first accounting period for which it is to have effect, which must be the first relevant period,

• (b) must be made no later than the date by which the information return or overseas return notification in respect of the first relevant period is due,

• (c) must be included in an information return submitted to HMRC or a qualifying authority in respect of the first relevant period,

• (d) has effect for the first relevant period and each subsequent accounting period, and

• (e) cannot be revoked.

• (12) In subsection (11), “the first relevant period” means the later of—

• (a) the first accounting period in which the member is an investor in the tax equity partnership arrangement, and

• (b) the first accounting period for which the Pillar Two rules apply to the member.

176E

• (1) Where this section applies, to determine the extent to which flow-through tax benefits provided to an investor in an accounting period under a tax equity partnership arrangement are qualifying, take the following steps—

• Step 1Determine the amount of capital investment provided by the investor to the arrangement at its commencement.

• Step 2Divide the flow-through tax benefits provided under the arrangement in the accounting period by the total flow-through tax benefits expected (as at the end of the accounting period) to be provided over the whole term of the arrangement.

• Step 3Multiply the result of Step 1 by the result of Step 2.

• Step 4Add the following together—the amounts, if any, of tax credits made available to be used by the investor under the arrangement in the accounting period;the value of the amounts, if any, of tax deductible losses made available to be used by the investor under the arrangement in the accounting period;the amounts, if any, of distributions made to the investor in the accounting period;the amounts, if any, received by the investor for the sale of any part of its investment in the arrangement in the accounting period.

• Step 5If the result of Step 3 is equal to or greater than the result of Step 4, all of the flow-through tax benefits provided under the arrangement in the accounting period are qualifying.Otherwise proceed to Step 6.

• Step 6Subtract the result of Step 3 from the result of Step 4.

• Step 7The amount of the flow-through tax benefits provided under the arrangement in the accounting period that is qualifying is the amount given by reducing the amount of those benefits (but not below nil) by the result of Step 6.

• (2) Accordingly, the amount by which those benefits are reduced in accordance with Step 7 represents non-qualifying flow-through tax benefits which are to be reflected as a credit in the investor’s qualifying current tax expense.

• (3) Subsections (4) to (6) apply in relation to an investor, an arrangement and an accounting period if flow-through tax benefits were provided to the investor under the arrangement in at least one earlier accounting period.

• (4) Where the result of Step 3 in subsection (1) would (but for this subsection) be greater than N, this section has effect as if the result of Step 3 were N.

• (5) To find N—

• (a) identify the amount that was the result of Step 3 in subsection (1) in each earlier accounting period in which flow-through tax benefits were provided to the investor under the arrangement,

• (b) add together all the amounts identified under paragraph (a), and

• (c) subtract the result of paragraph (b) from the result of Step 1 in subsection (1).

The result is N, unless the result is below nil, in which case N is nil.

• (6) A reference in subsection (5)(a) to the result of Step 3 in subsection (1) in an earlier accounting period, where subsection (4) had effect in relation to the earlier period, is to the result of that Step as modified under subsection (4).

176F

Where this section applies, to determine the extent to which flow-through tax benefits provided to an investor in an accounting period under a tax equity partnership arrangement are qualifying, take the following steps—

• Step 1Determine the amount of capital investment provided by the investor to the arrangement at its commencement.

• Step 2Subtract the following from that amount—the amounts, if any, of tax credits made available to be used by the investor under the arrangement since the commencement of the arrangement, other than tax credits— that were made available in the accounting period, andthat are not qualifying refundable tax credits or marketable transferable tax credits;the value of the amounts, if any, of tax deductible losses made available to be used by the investor under the arrangement since its commencement, other than losses made available in the accounting period;the amounts, if any, of distributions made to the investor since the arrangement’s commencement;the amounts, if any, received by the investor for the sale of any part of its investment in the arrangement.

• Step 3If the result of Step 2 is nil or less, no flow-through tax benefits provided under the arrangement in the accounting period are qualifying.If the result of that step is more than nil, proceed to Step 4.

• Step 4Subtract the flow-through tax benefits provided to the investor in the accounting period under the arrangement from the result of Step 2.

• Step 5If the result of Step 4 is nil or greater, all of the flow-through tax benefits provided under the arrangement in the accounting period are qualifying.Otherwise, the amount of those benefits that is qualifying is the amount of those benefits that when subtracted from the result of Step 2 would give a result of nil.

183A

• (1) A special foreign tax asset of a member of a multinational group is to be used to increase its covered tax balance in accordance with this section.

• (2) Subsection (3) applies where—

• (a) the territory in which a member of a multinational group is located requires that domestic losses are offset against relevant foreign income before foreign tax credits can be applied against tax on foreign income,

• (b) the territory limits the extent to which foreign tax credits can be applied against tax in a taxable period,

• (c) the territory allows foreign tax credits to be used to a greater extent where a domestic loss has been used to offset (in whole or in part) relevant foreign income in a prior period, and

• (d) the member has used a domestic loss to offset (in whole or in part) relevant foreign income.

• (3) Where this subsection applies, the member has a special foreign tax asset arising in the accounting period in which the loss was used.

• (4) The amount of that special foreign tax asset is the amount of the domestic loss used to offset relevant foreign income multiplied by the lesser of—

• (a) the nominal rate of tax in the member’s territory for the taxable period in which it was used, and

• (b) 15%.

• (5) Where a member of a multinational group has a special foreign tax asset that arose in any previous accounting period, the member is to use that amount to increase its covered tax balance.

• (6) The amount of the special foreign tax asset that is to be used in an accounting period is the lesser of—

• (a) the amount of the asset, and

• (b) so much of the amount of foreign tax credits credited against tax in the taxable period corresponding to that accounting period as is capable of being credited only as a result of the prior use of the domestic loss.

Any remainder continues to be a special foreign tax asset (and is available for use in subsequent account periods where subsection (5) applies).

197A

• (1) Subsection (2) applies where—

• (a) a member of a multinational group holds property located in the same territory as the member in an accounting period,

• (b) that property is held for lease by the member, and

• (c) the lease is accounted for in the underlying profits accounts of the member as an operating lease for that period.

• (2) The operating lease is to be regarded as an eligible tangible asset of the member for that period (despite the exclusion in section 197(7)(a)).

• (3) But where the property is not a short-term rental asset for that period, any carrying value of the operating lease recorded at the start or the end of the period is to be reduced by the right-of-use amount for the property at that time for the purposes of carrying out the calculation in section 197(1).

• (4) In a case where the lessee is a member of the same multinational group as the lessor, the right-of-use amount in relation to the property at the start or the end of the period is the carrying value of the lessee’s right-of-use asset in relation to the property recorded at that time.

• (5) Where the lessee is not a member of the same multinational group as the lessor, the right-of-use amount in relation to the property at the start or end of the period is the undiscounted value of any outstanding payments under the lease at that time.

• (6) In determining the value of those outstanding payments—

• (a) apply the accounting standard used in determining the underlying profits of the member,

• (b) include the value of any outstanding payments that would be due under any extension to the lease that would fall to be accounted for in accordance with that standard.

• (7) For the purposes of this section, property held for lease is a short-term rental asset in an accounting period if—

• (a) the property was leased regularly during that period to different lessees, and

• (b) the average length of the periods for which it was leased does not exceed 30 days.

198A

• (1) The Treasury may by regulations make provision about the treatment of payroll costs and tangible assets in specified circumstances.

• (2) Regulations may, in particular, provide that in determining the substance based income exclusion for a territory—

• (a) specified eligible tangible assets or eligible payroll costs are to be treated as having a different value;

• (b) specified eligible tangible assets or eligible payroll costs are to be attributed to a different member of a multinational group or to a different territory;

• (c) specified eligible tangible assets or eligible payroll costs are to be excluded from that determination;

• (d) specified assets that are not eligible tangible assets are to be treated as eligible tangible assets;

• (e) specified costs that are not eligible payroll costs are to be treated as eligible payroll costs.

• (3) In this section “specified” means specified or described in regulations.

Top-up amounts multiplied by inclusion ratio

Inclusion ratio

Covered taxes balance less than nil when members in a territory have a profit

Additional top-up amounts where covered taxes less than expected

Allocation of collective additional amount under section 203 to members

Election to carry forward and reduce collective additional amount

Additional top-up amounts where recalculations required

Allocation of collective additional amounts under section 206 to members

Member joining or leaving multinational group

When transfer of controlling interest treated as acquisition of assets and liabilities

Transfer of assets or liabilities from a member of a multinational group

Meaning of “qualifying reorganisation”

Taxable distribution method election

Undistributed income amount

Election where assets and liabilities adjusted to fair value for tax purposes

Effect of rate changes to deferred tax expense

Adjustment where covered taxes not paid

Substance based income exclusion for investment entity

Adjustments

Additional top-up amounts of investment entities

Attribution of top-up amounts and additional top-up amounts to responsible member

Joint venture group

Application of Part to joint venture groups

Multi-parent groups

Meaning of entity

232A

• (1) A partnership is to be regarded for the purposes of this Part as continuing to be the same partnership regardless of a change in membership, provided that a person who was a member before the change remains a member after the change.

• (2) Where—

• (a) ownership interests in a partnership are transferred to more than one individual or entity, and

• (b) the result is a partnership of which none of the original partners are members,

that new partnership is to be treated as if it were the same partnership as the old partnership.

• (3) Where a partnership is otherwise dissolved in an accounting period—

• (a) the partnership is to be treated as a continuing entity for the purpose of dealing with its rights and obligations under this Part in respect of that accounting period and previous accounting periods, and

• (b) for the purposes of Schedule 14 (administration) each person who was a partner in that accounting period (before the partnership’s dissolution) is to be treated as a partner of the continuing entity.

• (4) The reference in subsection (2) to a transfer of ownership interests includes any series of transactions having the effect of a transfer (including by way of the cancellation of interests and the issue of corresponding interests).

251A

• (1) In this Part “country-by-country report” means a country-by-country report in respect of a multinational group that is prepared and filed in accordance with legislation implementing the OECD’s guidance on country-by-country reporting.

• (2) But where the legislation of a territory permits the preparation and filing of a partial country-by country report, such a partial report is not to be regarded as country-by-country report for the purposes of this Part.

• (3) Reference to a country-by-country report in respect of a multinational group that is a multi-parent group is to a report in respect of all of the constituent groups.

• (4) “The OECD’s guidance on country-by-country reporting” means the guidance on country-by-country reporting contained in the Organisation for Economic Co-operation and Development (“OECD”) Guidance on Transfer Pricing Documentation and Country-by-Country Reporting, published in 2014, as modified, supplemented or replaced from time to time.

256A

• (1) Subsection (2) applies for the purposes of sections 194(2) to (7), 203(3) to (7) and 206(4) to (8) (application of QDT credits in determination of top-up amounts).

• (2) An amount of qualifying domestic tax accruing to a member of a multinational group is to be treated as not accruing to the member where the enforceability of the amount is in question.

• (3) For the purposes of this section, the enforceability of an amount of qualifying domestic top-up tax accruing to a member of a multinational group is in question if—

• (a) the member disputes its enforceability on any of the grounds set out in subsection (4), or

• (b) the tax authority of the territory in which the qualifying domestic top-up tax is imposed considers the amount unenforceable on the basis of any of those grounds.

• (4) Those grounds are that—

• (a) the amount is unenforceable on constitutional grounds or as a result of other superior law applying in the territory in which the qualifying domestic top-up tax is imposed, or

• (b) the amount is unenforceable as a result of a specific agreement with the government of that territory as to the tax liability of the member or the group.

• (5) Subsection (2) ceases to apply where the enforceability of an amount of qualifying domestic top-up tax ceases to be in question.

• (6) Where the enforceability of an amount of qualifying domestic top-up tax was in question, it ceases to be in question where—

• (a) the amount has been paid, and

• (b) the enforceability of the amount may no longer be disputed as a result of—

• (i) a settlement,

• (ii) the time for any appeal having passed and there being no reasonable prospect of the time being extended, or

• (iii) the exhaustion of any rights to appeal.

Transitional provision and safe harbours

Index of defined expressions

Power to amend to ensure consistency with Pillar Two

Regulations

Multinational top-up tax to apply from 31 December 2023

Qualifying entities

267A

• (1) Subsection (2) applies to a securitisation company that is a member of a group.

• (2) The company is only to be regarded as a member of the group for the purposes of applying Condition C in section 266 in relation to other members of the group (revenue threshold for group).

• (3) Otherwise, the company is to be treated as not being a member of any group for the purposes of domestic top-up tax.

268A

Section 232A (partnerships) applies for the purposes of this Part as it applies for the purposes of Part 3.

272A

• (1) This section applies where—

• (a) a covered bond vehicle that is a member of a group would, ignoring this section, have a top-up amount or an additional top-up amount for an accounting period, and

• (b) at least one of the other members of the group in that period—

• (i) is located in the United Kingdom, and

• (ii) is not a covered bond vehicle.

• (2) For domestic purposes, section 193 (calculation of top-up amounts) has effect for the purpose of determining the top-up amounts (and additional top-up amounts) of—

• (a) the covered bond vehicle, and

• (b) the other members of the group that are located in the United Kingdom,

as if the adjusted profits of the covered bond vehicle were nil.

• (3) But subsection (4) applies if none of the members of the group that are located in the United Kingdom, and are not covered bond vehicles, have made a profit for that period (and accordingly will not, ignoring that subsection, have top-up amounts).

• (4) Each of those members has a top-up amount equal to the amount given by dividing—

• (a) the sum of the top-up amounts and additional top-up amounts that, ignoring subsection (2), each covered bond vehicle located in the United Kingdom would otherwise have, by

• (b) the number of those members.

• (5) For the purposes of this section “covered bond vehicle” has the meaning given by paragraph 53(7) of Schedule 19 to FA 2011.

273A

• (1) The provisions mentioned in subsection (2) apply to a qualifying entity, for domestic or domestic entity purposes, as if the references to the first accounting period for which the Pillar Two rules apply were to the first accounting period for which the entity is a qualifying entity.

• (2) Those provisions are—

• (a) section 185;

• (b) section 187;

• (d) sub-paragraph (4) of paragraph 2 of Schedule 16 (but see also section 276(c)(iii) which omits that paragraph in the case of a qualifying entity that is not a member of a group).

273B

• (1) This section applies where the Pillar Two rules did not apply to a qualifying entity for one or more accounting periods (each a “pre-Pillar Two period”).

• (2) Where—

• (a) the entity has a recaptured deferred tax liability arising as a result of section 184 (recaptured deferred tax liabilities),

• (b) the initial period, in relation to that liability, is a pre-Pillar Two period, and

• (c) the first accounting period in which the Pillar Two rules apply to the entity is earlier than the sixth accounting period after the initial period,

section 184(2) (recalculation in initial period taking account of recaptured deferred tax liability) does not apply in relation to that recaptured deferred tax liability.

• (3) Where an election under section 187 (election for losses to be treated as special loss deferred tax assets) applied to the entity in a pre-Pillar Two period—

• (a) the election ceases to have effect for the first accounting period in which the Pillar Two rules apply, and

• (b) subsection (2)(b) of section 187 does not apply to prevent the making of an election under section 187 that applies to the entity and that has effect for that period, but

• (c) no remaining amount of special loss deferred tax assets that arose in a pre-Pillar Two period may be used in that first accounting period or any subsequent accounting period.

• (4) Subsection (5) or (6) (as the case may be) applies where—

• (a) a deferred tax asset arises to the entity in a pre-Pillar Two period,

• (b) section 185(7)—

• (i) applies to that asset for the purposes of multinational top-up tax, or

• (ii) would, ignoring subsection (5) below, apply to that asset for those purposes, and

• (c) the asset is reflected in a collective additional amount for the purposes of domestic top-up tax.

• (5) Where—

• (a) an election has been made under section 205 (election to carry forward) in relation to the collective additional amount,

• (b) the subtraction required by subsection (2)(a) of that section has not occurred in a pre-Pillar Two period,

the amount to be subtracted as a result of that subsection is to be reduced by so much of that amount as reflects the asset.

• (6) Otherwise, section 185(7) does not apply to the asset for the purposes of multinational top-up tax to the extent it was reflected in a collective additional amount for the purposes domestic top-up tax.

273C

• (1) This section applies to a dividend or other distribution made by a protected cell company that is received or accrued by—

• (a) a qualifying entity that is not a member of a group, or

• (b) a member of a group that has no members located outside of the United Kingdom.

• (2) A dividend or other distribution to which this section applies is to be treated as an excluded dividend (see section 141) for domestic purposes and domestic entity purposes.

Charge on exceptional generation receipts

Benchmark amount

Attribution of generation

Generation receipts

Exceptional generation fuel costs

Exceptional revenue sharing costs

Lead member of a group and its qualifying periods

Liability of members of groups

Election for members with significant minority shareholding to pay levy

Qualifying joint ventures

Non-chargeable amounts of joint venture to be attributed to participants

Generation acquired and supplied by JV participants

Arrangements that reflect receipts (JV participants)

Generation acquired and supplied by significant minority shareholders

Arrangements that reflect receipts (significant minority shareholders)

Surrender of shortfalls

Amount that may be surrendered and use of that amount

Election to treat certain companies as transparent

Effect of company being transparent

General application of corporation tax administration

Company tax returns

Requirement to provide information about payments

Claims to shortfall amounts

Application of Part 5A of TMA 1970 and Instalment Payments Regulations

Anti-avoidance

311A

• (1) Generating plant is “qualifying new generating plant” if it is new generating plant commissioned as part of a qualifying project that meets the new investment condition.

• (2) The new investment condition is met in relation to a qualifying project if on 21 November 2023 it was reasonable to conclude, having regard to all of the circumstances, that there is a significant likelihood of the project not proceeding.

• (3) The Treasury may by regulations provide for cases in which qualifying projects are to be treated as meeting the new investment condition.

• (4) “Qualifying project” means a project to commission—

• (a) new generating plant for—

• (i) a new generating station, or

• (ii) an existing generating station which (as a result of the project) is to be wholly or substantially comprised of new generating plant, or

• (b) new generating plant that increases the generating capacity of an existing generating station.

• (5) Subsection (6) applies where new generating plant that increases the generating capacity of an existing generating station replaces existing generating plant.

• (6) Only so much of the new generating plant as represents generating capacity in excess of the capacity of the generating plant it replaces is to be regarded as qualifying new generating plant.

Transactions funded with the assistance of a public subsidy

Deposit schemes

Dumping, subsidisation and safeguarding remedies

Rulings as to method of valuation of goods

Discharging goods from free-circulation procedure subject to guarantee

Excepted machines etc

Rates of tobacco products duty

Flavour concentrates

New bands and rates

Northern Ireland rates

Rates of vehicle excise duty

Reform of HGV road user levy

End of exempt period for HGV road user levy

Rates of climate change levy

Rate of plastic packaging tax

Aggregates levy: exemptions and exploitation

Designation of sites

Sunset date for reliefs

Right to repayment of income tax to be inalienable

Penalties for failure to pay value added tax

VAT credits: repayment interest due where evidence not provided

Insurance premium tax: power to make regulations about notifications

Penalties for failure to make payments of plastic packaging tax on time

Approval of aerodromes

Approved aerodromes: minor and consequential amendments

Temporary approvals etc

Licensing authorities: requirements to give or obtain tax information

Section 342: consequential amendments

Definition of “charity” restricted to UK charities

Definition of “community amateur sports club” restricted to UK clubs

Exemptions from tax

Abolition of the Office of Tax Simplification

Pension benefits and inheritance tax

International arrangements for exchanging information

Payment of unclaimed money in court into the Consolidated Fund

Financial sanctions regulations: prohibition on certain payments by HMRC

Communications data

Interpretation

Short title

Requirement to make claim notifications in relation to certain R&D claims

Relief for R&D expenditure on data and cloud computing

Relief for R&D expenditure on data and cloud computing: consequential amendments

Determining the worldwide group: consequential amendment

Power of HMRC to collect overpaid R&D tax relief or expenditure credit

Time limits for R&D claims

Requirement to provide additional information in relation to R&D claims

Power of HMRC to remove R&D claims made in error from return

Amendment of CTA 2009

R&D tax relief: circumstances in which enterprises are treated as SMEs

Accounts treated as prepared on going concern basis

Meaning of expenditure incurred on payments

The applicable rate for grossing up basic amounts of estate income

The applicable rate for grossing up for determining shares in an estate in the final tax year

Income from stock dividends etc treated as bearing income tax at 0%

Income treated as dividend income and savings income

Order in which basic amounts are treated as paid from aggregate income

The applicable rate for grossing up basic amounts of estate income

The applicable rate for grossing up for determining shares in an estate in the final tax year

Income from stock dividends etc treated as bearing income tax at 0%

Order in which basic amounts are treated as paid from aggregate income

Low income estates and trusts: tax liability of personal representatives and trustees

Low income estates: tax liability of beneficiaries

Introduction

Tax-interest expense amounts of a company: charities

First period of account where new holding company

Amounts not brought into account in determining a company’s tax-EBITDA

“Relevant expense amount” and “relevant income amount”

Adjusted net group-interest expense: debits referable to times before UK property business etc carried on

Adjusted net group-interest expense: debits in respect of pre-trading expenditure

Qualifying net group-interest expense: meaning of “equity notes”

Capitalised interest brought into account for tax purposes in accordance with GAAP

Interest allowance (non-consolidated investment) election: “non-consolidated associate”

Public infrastructure

Partnerships and other transparent entities

Investments held by investment managers

Determining the worldwide group: “non-consolidated subsidiary” and “consolidated subsidiary”

Appointment of a reporting company by Revenue and Customs

Revised interest restriction return

Enquiry into interest restriction return

Determinations by officers of Revenue and Customs

Consequential claims to company tax returns

Penalties for errors: CIR alterations to be ignored in calculating potential lost revenue

Disapplication of carry forward rule for deficits

Defined expressions used in Part 10 of TIOPA 2010: “insurance company”

Determining the worldwide group: consequential amendment

Genuine diversity of ownership

Amendment of CTA 2010

REITs involving single commercial property

3-year development rule

Genuine diversity of ownership

Amendment of the Real Estate Investment Trusts (Assessment and Recovery of Tax) Regulations 2006

Amendment of Schedule 2 to FA 2022

Securitisation companies unable to be QAHCs

Beneficial entitlement held only through QAHCs

Determining relevant interests

Dealing with bodies corporate without share capital

Genuine diversity of ownership

Investment strategy condition

Disposal of derivatives where underlying subject matter is shares

Alternative finance arrangements

Records to be kept for the purposes of corporation tax

Assessments relating to corporation tax

Records to be kept for the purposes of income tax

Assessments relating to income tax

Penalties for errors

Information and inspection powers

Beer

33A

• (1) Where a person has paid an amount that has been paid by way of multinational top-up tax but the amount is not due, the amount incurs interest at the rate provided for in regulations made under section 178 of FA 1989 from the later of—

• (a) the day after the latest day (under paragraph 32) by which the amount paid would have been required to be paid as multinational top-up tax if it were due, and

• (b) the day on which the amount was paid.

• (2) See paragraph 51 for provision about making claims for the repayment of an amount that is not tax that was due (but see also paragraph 52 which, for example, prevents such a claim being made where an amendment to an assessment can be, or could have been, made).

37A

• (1) An officer of Revenue and Customs may issue a partnership payment notice if an amount of multinational top-up tax payable by a member of a multinational group that is a partnership (including any interest on that amount) is not paid by the end of the period of three months beginning with the relevant date (see paragraph 34(7) to (9)).

• (2) A partnership payment notice may be issued to any person (wherever in the world they are located) who—

• (a) is a partner, or

• (b) was a partner at any time in the accounting period to which the amount payable relates.

• (3) A partnership payment notice is a notice requiring the recipient to pay an outstanding amount of multinational top-up tax payable by a member of the group that is a partnership by a date specified in the notice.