Legalize / United Kingdom / Public General Act

Finance Act 2025

Type Public General Act

Publication 2025-03-20

State In force

Department Statute Law Database

Source legislation.gov.uk

articles Not indexed

(5) But neither subsection (3) nor (4) applies to the reference to “standard member” in section 199(2A) (election to treat top-up amounts of relevant members as nil).

Transitional safe harbour

46

(1) Part 2 of Schedule 16 (transitional safe harbour) is amended as follows.

(2) In paragraph 3 (election)—

(a) in sub-paragraph (1), after “election” insert “under this paragraph”,

(b) in sub-paragraph (2)(c), for “the election” substitute “a transitional safe harbour election”,

(d) after that sub-paragraph insert—

(7A) For the purposes of sub-paragraph (7), “all relevant information” means all of the information described in paragraphs (a) to (d) of paragraph 4(3).

, and

(e) after sub-paragraph (9) insert—

(10) An election under this paragraph may not be made in respect of the nominal territory of a stateless member of a multinational group.

(3) In paragraph 4 (qualified financial statements), in sub-paragraph (1)—

(a) in paragraph (a)—

(i) for “statement” substitute “statements”, and

(ii) after “parent” insert “provided the statements are prepared in accordance with acceptable accounting standards or an authorised accounting standard”, and

(b) for paragraph (b) substitute—

(b) financial statements of members of the group provided— (i) they are prepared in accordance with acceptable accounting standards or an authorised accounting standard, and (ii) the information contained in those statements is reliable and is maintained in a manner that is consistent with its use under the accounting standard used in preparing those statements.

(4) In paragraph 4, after sub-paragraph (1) insert—

(1A) But see also paragraph 4A in cases where those accounts or statements reflect purchase price accounting adjustments.

(5) In paragraph 4, in sub-paragraph (3), in paragraph (d), after “income” insert “exclusion”.

(6) After paragraph 4 insert—

(4A) (1) This paragraph applies in relation to accounts or financial statements (“the relevant statements”) in relation to a multinational group in a territory that— (a) fall within paragraph (a) or (b) of paragraph 4(1), and (b) reflect purchase price accounting adjustments. (2) If— (a) a country-by-country report has been submitted in respect of the group in that territory in respect of a period commencing on or after 1 January 2023 and concluding before the commencement of the accounting period for which the transitional safe harbour election is being made, (b) the financial accounts used for the preparation of that report did not reflect purchase price accounting adjustments, and (c) there is no requirement to reflect purchase price adjustments in the relevant statements under the law of the territory that applies in relation to the preparation of those statements, the relevant statements are not qualified financial statements. (3) Sub-paragraph (4) applies if— (a) the relevant statements are qualified financial statements, and (b) an impairment of goodwill in relation to a transaction entered into on or after 1 December 2021 is reflected in a member’s profit (loss) before income tax. (4) Adjust the profit (loss) before income tax of the member so that it does not reflect that impairment for the purposes of determining— (a) in a case where the condition in sub-paragraph (5) is not met, whether the simplified effective tax rate test is met (see paragraph 8), and (b) in any case, whether the routine profits test is met (see paragraph 9). (5) The condition in this sub-paragraph is that the relevant statements reflect— (a) a reversal of deferred tax liability in relation to the goodwill, or (b) the recognition or increase of a deferred tax asset in relation to it.

(7) In paragraph 5 (qualifying income tax expense)—

(a) the existing text becomes sub-paragraph (1), and

(b) after that sub-paragraph insert—

(2) For the purposes of this Part of this Schedule, any amount of qualifying income tax expense that is in respect of profits of a permanent establishment and that is incurred in the territory of the permanent establishment is to be regarded as the expense of that permanent establishment (rather than of the main entity).

Transitional safe harbour: arbitrage arrangements

47

(1) In Schedule 16, after paragraph 6 insert—

(6A) (1) Where the aggregate profit (loss) before income tax of the standard members of a multinational group in a territory reflects disqualified expense, the aggregate profit (loss) before income tax is to be adjusted to exclude it. (2) Disqualified expense means any expense or loss of a member of a multinational group reflected in the financial statements of the member arising as a result of qualifying arrangements that involve another member of the group— (a) to the extent that the expense or loss is a result of the member directly or indirectly being provided credit by the other member or the other member otherwise making an investment in the member under the arrangements and— (i) the credit or investment is not reflected as an increase in the revenue, or a gain, in the financial statements of the other member that corresponds to the expense or loss, or (ii) it is not reasonable to expect that the credit or investment will be reflected as an increase in the taxable income of the other member over the life of the arrangements that corresponds to the expense or loss, or (b) to the extent that— (i) the expense or loss is also included as an expense or loss in the financial statements of another member of the group, or (ii) the expense or loss is mirrored by an amount that can be deducted from the taxable income of another member of the group that is located in a different territory to the member. (3) But— (a) an expense or a loss is not disqualified expense as a result of sub-paragraph (2)(a) if it is solely referable to the provision of qualifying tier one capital, (b) an expense or loss is not disqualified expense as a result of sub-paragraph (2)(b)(i) to the extent it is offset against revenue that is included in the financial statements of each member whose financial statements reflect the expense or loss, and (c) an expense or loss is not disqualified expense as a result of sub-paragraph (2)(b)(ii) to the extent that it is offset against revenue or income that is included in both— (i) the financial statements that reflect the expense or loss, and (ii) the taxable income from which the amount that mirrors the expense or loss can be deducted. (4) An expense or loss included in the financial statements of a member of a multinational group is to be ignored to the extent that the expense or loss is included in the financial statements of another member of the group as a result of— (a) the other member having a direct or indirect ownership interest in the member, and (b) the member being regarded as tax transparent in the territory in which the other member is located. (5) Where as a result of sub-paragraph (2)(b)(i) more than one standard member in a territory has disqualified expense in respect of the same expense or loss, sub-paragraph (1) applies to all but one of those amounts of disqualified expense. (6) For the purposes of sub-paragraph (2)(a)(ii), ignore any increase in the taxable income of the other member— (a) that is offset by a devalued tax attribute, or (b) where— (i) the payment that gives rise to the expense or loss in question also results in a taxable deduction or loss of a further member of the group located in the same territory as the other member, and (ii) that deduction or loss is not reflected in the aggregate profit (loss) before income tax for that territory for the purposes of determining whether an election under paragraph 3 that applies in relation to that further member can be made. (7) For the purposes of sub-paragraph (6)(a), a “devalued tax attribute” means a tax attribute of a member of a multinational group— (a) whose value is reflected in financial statements of the member at less than the amount of the attribute multiplied by the tax rate that applies to the member, or (b) whose value would be so reflected if the qualifying arrangements that result in disqualified expense or disqualified tax expense (see paragraph 6B) were ignored. (8) For the purposes of this paragraph and paragraph 6B, arrangements are “qualifying” if— (a) they were entered into on or after 16 December 2022, or (b) they were entered into before that date, but— (i) the arrangements are amended on or after that date (including by way of a substitution of one or more of the parties), (ii) the performance of rights or obligations under the arrangements is altered on or after that date (for example where payments under the arrangements are reduced or ceased), or (iii) the accounting treatment of the arrangements is varied on or after that date. (9) In this paragraph and in paragraph 6B reference to the financial statements of a member of a multinational group is— (a) in relation to an accounting period in which an election under paragraph 3 that applies in relation to the member was made, or for the purposes of determining whether such an election can be made, to the financial statements, or financial accounts, that form the basis of qualified financial statements in relation to the member for the purposes of this Part of this Schedule, or (b) otherwise, to the underlying profits accounts of that member (see section 136). (6B) (1) Where the aggregate qualifying income tax expense of the standard members of a multinational group in a territory reflects disqualified tax expense, the aggregate qualifying income tax expense is to be adjusted to exclude it. (2) Disqualified tax expense means any qualifying income tax expense of a member of a multinational group reflected in the financial statements of the member that, as a result of qualifying arrangements, is also reflected in— (a) the covered tax balance of one or more other members of the group, or (b) the qualifying income tax expense of one or more other members of the group. (3) But qualifying income tax expense is not to be regarded as disqualified tax expense— (a) if the income to which the tax expense relates is reflected in the financial statements of each member of the group falling within sub-paragraph (2)(a) and (b) to at least the same extent to which the tax expense is reflected in the covered tax balance, or qualifying income tax expense, of each of those members; (b) to the extent that the duplication of the tax expense would not arise if the adjustments that would have been made in determining the member’s covered tax balance (and that are not required to be made for the purpose of determining the member’s qualifying income tax expense) had been made.

(2) The amendment made by sub-paragraph (1) has effect in relation to—

(a) disqualified expense accruing on or after 14 March 2024, and

(b) disqualified tax expense attributable to profits accruing on or after 14 March 2024.

(3) In paragraph 4 (qualified financial statements and basis of calculations), in sub-paragraph (4), in the words after paragraph (b) for “paragraph 6” substitute “paragraphs 6 to 6B”.

(4) In section 155 (qualifying tier one capital), in subsection (3), for “section” substitute “Part”.

(5) In Schedule 17, in the table, at the appropriate place insert—

qualifying tier one capital	section 155(3)

Substance based income exclusion: removal of provision for election

48

(1) In section 195 (substance based income exclusion) omit subsections (2) and (3).

(2) Accordingly, in paragraph 2 (annual elections) of Schedule 15 (multinational top-up tax: elections), omit paragraph (e).

Inclusion ratio

49

(1) Section 201 (inclusion ratio) is amended as follows.

(2) In subsection (1), in Step 2, at the end insert “, but excluding ownership interests in respect of which an amount has been excluded from the relevant member’s adjusted profits.”

(3) Omit subsection (4).

50

(1) Section 223 (adjustments) is amended as follows.

(2) In subsection (7)—

(a) in paragraph (a), after “group,” insert “, other than ownership interests in respect of which an amount has been excluded from the adjusted profits of the entity,”;

(b) in paragraph (b), before “profits” insert “adjusted”;

(but if the amount mentioned in paragraph (b) is nil, the adjustment factor is to be taken to be nil).

(3) In subsection (8)—

(a) in paragraph (a), after “made,” insert “, other than ownership interests in respect of which an amount has been excluded from the adjusted profits of the entity,”;

(b) at the end insert—

(but if the amount mentioned in paragraph (b) is nil, the adjustment factor is to be taken to be nil).

(4) In subsection (9), after “201(2)” insert “and (3)”.

Specification of territories and taxes

51

(1) In section 241 (Pillar Two territories)—

(a) in subsection (1), before “regulations” insert “, or in accordance with,”,

(b) after that subsection insert—

(1A) Regulations may provide for the specification of a territory to be made by notice published by the Commissioners for His Majesty’s Revenue and Customs in accordance with the regulations.

(i) after “Regulations” insert “, or a notice,”, and

(ii) for “Treasury consider” substitute “appropriate authority considers”,

(d) after that subsection insert—

(2A) The “appropriate authority” means— (a) in relation to the specification of a territory in regulations, the Treasury, or (b) in relation to the specification of a territory made by notice, the Commissioners for His Majesty’s Revenue and Customs.

(e) in subsection (3)—

(i) for “that”, in the first place it occurs, substitute “for”,

(ii) omit “is”,

(iii) for “the regulations are made”, in the first place it occurs, substitute “the territory was specified”, and

(iv) for “that the specification of a territory previously specified ceases to have effect” substitute “for the specification of a territory to cease to have effect in relation to accounting periods commencing”, and

(f) after that subsection insert—

(4) A territory outside the United Kingdom is to be treated as a Pillar Two territory for the purposes of any accounting period that concluded before the first regulations under this section have been made, if it is a territory in which a tax applies for that accounting period— (a) that is a Qualified IIR for the purposes of the Pillar Two rules, or (b) that it is reasonable to conclude is likely to be a Qualified IIR for the purposes of those rules.

(2) In section 256 (qualifying domestic top-up tax)—

(a) in subsection (1)(b), for “a” substitute “, or in accordance with,”,

(b) after that subsection insert—

(1A) Regulations may provide for the specification of a tax to be made by notice published by the Commissioners for His Majesty’s Revenue and Customs in accordance with the regulations.

(i) after “regulations” insert “, or a notice,”, and

(ii) for “Treasury consider” substitute “appropriate authority considers”,

(d) after that subsection insert—

(2A) The “appropriate authority” means— (a) in relation to the specification of a tax in regulations, the Treasury, or (b) in relation to the specification of a tax made by notice, the Commissioners for His Majesty’s Revenue and Customs.

(e) in subsection (4)—

(i) for “that”, in the first place it occurs, substitute “for”,

(ii) omit “is”,

(iii) for “the regulations are made”, in the first place it occurs, substitute “the tax was specified”, and

(iv) for “that the specification of a tax previously specified ceases to have effect” substitute “for the specification of a tax to cease to have effect in relation to accounting periods commencing”, and

(f) after that subsection insert—

(5) A tax (other than domestic top-up tax which is always a qualifying domestic top-up tax) is to be treated as a qualifying domestic top-up tax for the purposes of any accounting period that concluded before the first regulations under this section have been made if— (a) it is a Qualified Domestic Minimum Top-up Tax for that accounting period for the purposes of the Pillar Two rules, or (b) it is reasonable to conclude that it is likely to be a Qualified Domestic Minimum Top-up Tax for that accounting period for the purposes of those rules.

(3) In Schedule 16A (qualifying domestic top-up tax safe harbour election)—

(a) in paragraph 1(3)—

(i) in the words before paragraph (a), for “may only be made” substitute “is only valid”,

(ii) omit the “and” after paragraph (b), and

(iii) after that sub-paragraph insert—

(ba) the accreditation applies to the accounting period, and

, and

(b) in paragraph 2—

(i) the existing text becomes sub-paragraph (1),

(ii) in that sub-paragraph, before “regulations” insert “, or in accordance with,”,

(iii) after that sub-paragraph insert—

(1A) Regulations may provide for the accreditation of a tax by specification in a notice published by the Commissioners for His Majesty’s Revenue and Customs in accordance with the regulations. (1B) Regulations, or a notice, must identify the accounting periods to which the accreditation applies. (1C) Regulations under this paragraph may provide for the accreditation of a tax to have effect from a time before the tax was specified (but may not provide for the accreditation of a tax to cease to have effect in relation to accounting periods commencing before the regulations are made).

, and

(iv) at the end insert—

(2) A qualifying domestic top-up tax is to be treated as accredited for the purposes of any accounting period that concluded before the first regulations under this paragraph have been made if— (a) the tax falls within Chapter 5.5 to 5.7 of the QDMTT safe harbour guidance, or (b) it is reasonable to conclude that the tax is likely to fall within Chapter 5.5 to 5.7 of that guidance. (3) For the purposes of sub-paragraph (2) the “QDMTT safe harbour guidance” means Chapter 5 of Tax Challenges Arising from the Digitalisation of the Economy – Administrative Guidance on the Global Anti-Base Erosion Model Rules (Pillar Two), July 2023, published by the OECD on 17 July 2023.

(4) The amendments made by sub-paragraphs (1)(f), (2)(f) and (3)(b)(i) and (iv) are treated as having come into force on 7 November 2024.

Filing etc not required before 30 June 2026

52

(1) Schedule 14 (administration) is amended as follows.

(2) In paragraph 10, after sub-paragraph (11) insert—

(12) Where (ignoring this sub-paragraph) the date by which an information return or overseas return notification must be submitted falls before 30 June 2026, the date by which that return or notification must be submitted is 30 June 2026 instead.

(3) In paragraph 13, after sub-paragraph (10) insert—

(11) Where (ignoring this sub-paragraph) the date by which a self assessment return or below-threshold notification must be submitted falls before 30 June 2026, the date by which that return or notification must be submitted is instead 30 June 2026 instead.

(4) In paragraph 32, after sub-paragraph (3) insert—

(3A) Where (ignoring this sub-paragraph) the date on which an amount of multinational top-up tax must be paid falls before 30 June 2026, the date on which it must be paid is 30 June 2026 instead.

Minor amendments

53

In section 141 (general exclusion of dividends), in subsection (9) omit paragraph (b) and the “or” preceding it.

54

In section 148A (transferable tax credits), in subsection (5)(a)—

(a) in sub-paragraph (i), for “before the end of 15 months” substitute “in the period beginning with the day on which the credit was granted and ending 15 months after the end”, and

(b) in sub-paragraph (ii), for “before the end of 15 months of the accounting period in which they are granted” substitute “in that period”.

55

In section 170 (adjustments for ultimate parent that is a flow-through entity), in subsection (9)(b), for the words from “the ultimate parent’s“ to the end substitute

— (i) the entity is regarded as tax transparent in the territory in which the ultimate parent is located, and (ii) the ultimate parent’s interest in that entity is held directly or through one or more entities all of which are regarded as tax transparent in that territory.

56

In section 171 (ultimate parent subject to qualifying dividend regime)—

(a) in subsection (2)(b), omit “adjusted”, and

(b) in subsection (6), for “underlying”, in each place it occurs, substitute “adjusted”

57

In section 176B (value of non-marketable transferable tax credits: originator), in subsection (3), after “the”, in the fourth place it occurs, insert “end of the”.

58

In section 176C (value of non-marketable transferable tax credits: purchaser)—

(a) in subsection (4)(b), for “underlying” substitute “adjusted”;

(b) in subsection (5)(a)(ii) omit “reflected”;

59

In section 176D (tax credits etc allocated under tax equity partnerships), in subsection (10), for “the amount multiplied” substitute “that amount”.

60

In section 211 (transfer of assets or liabilities to a member of a multinational group)—

(a) in subsection (2)—

(i) omit the “and” after paragraph (b), and

(ii) after that paragraph insert—

(ba) the transferor and the transferee are not members of the same type located in the same territory, and

, and

(b) after subsection (4) insert—

(5) For the purposes of subsection (2) two members of a multinational group are of the same type if— (a) they are both standard members of the group, (b) they are both investment entities, or (c) they are both members of the same minority subgroup (see section 228).

61

In section 212 (meaning of “qualifying reorganisation”), in subsection (4), after “is”, in the third place it occurs, insert “no greater than”.

62

In section 215 (undistributed income amount), in subsection (2)(c) omit “the made a loss”.

63

In section 216 (election where assets and liabilities adjusted to fair value for tax purposes), in subsection (7)(a), before “immediately after” insert “or liability”.

64

In section 217 (post filing adjustments of covered taxes), after subsection (1) insert—

(1A) In the case of a prior accounting period for which there is no information return, overseas information return or self-assessment return, the reference to covered taxes being reflected in such a return is to the covered taxes as would have been reflected in such a return had there been one.

65

In section 217(8), for paragraph (a) substitute—

(a) the aggregate covered tax balance of the standard members of the group in the territory of the member for the prior period is not reduced by 1 million euros or more, and

66

In section 220 (top-up amount of investment entity)—

(a) in subsection (1)—

(i) in Step 8, after “entity” insert “, unless the entity has a positive undistributed income amount (see sections 214 and 215) for the period (in which case proceed to Step 9), and

(ii) after that Step insert—

Step 9 Where this Step applies, the top-up amount for the entity is the sum of— the result of Step 8, and the positive undistributed income amount for the entity for the period multiplied by 15%.

, and

(b) omit subsection (2).

67

In section 222 (investment entity effective tax rate), in Step 9 for “Step 1” substitute “Step 2”.

68

In section 242 (ownership interests and controlling interests), in subsection (5)(a) omit “financial”.

69

In section 255 (Pillar Two rules), in subsection (6), for “3(1)” substitute “3 of Schedule 16”.

70

In Schedule 14 (administration of multinational top-up tax)—

(a) in paragraph 2(12), for “entity” substitute “member”;

(b) in paragraph 7(6), for “or Revenue” substitute “of Revenue”.

71

In Schedule 16A (multinational top-up tax: safe harbours), in paragraph 4(1)(b) omit “members of the group that are”.

Commencement

72

(1) The following provisions of this Part of this Schedule have effect in relation to accounting periods commencing on or after 31 December 2023—

(a) paragraph 11 (permanent establishments as excluded entities);

(b) paragraph 39 (d) (joint venture conditions);

(d) paragraph 51 (specification of territories and taxes);

(e) paragraph 52 (filing etc not required before 30 June 2026);

(f) paragraph 66 (top-up amount of investment entity).

(2) Paragraph 47 has effect in relation to relation to accounting periods commencing on or after 31 December 2023, subject to sub-paragraph (2) of that paragraph.

(3) The following provisions of this Part of this Schedule have effect in relation to accounting periods commencing on or after 31 December 2024—

(a) paragraphs 18 to 24 (tax equity partnerships);

(b) paragraphs (a) to (c) of paragraph 39.

(4) The other provisions of this Part of this Schedule have effect in relation to—

(a) where a retrospection election has been made in relation to a multinational group, a group, or a qualifying entity that is not a member of a group, accounting periods of that multinational group, group or entity commencing on or after 31 December 2023, or

(b) otherwise, accounting periods commencing on or after 31 December 2024.

(5) A retrospection election—

(a) is to be made—

(i) in the case of a multinational group or group, by the filing member, or

(ii) in the case of a qualifying entity that is not a member of a group, by that entity,

(b) must be made on or before the day on which the self-assessment return or below-threshold notification for the first accounting period of the multinational group, group or entity commencing on or after 31 December 2023 is made, and

(6) But sub-paragraph (7) applies where any member, or former member, of a multinational group or group is, or would be on either or both of the relevant assumptions—

(a) a person chargeable to domestic top-up tax that has top-up amounts or additional top-up amounts for any accounting period commencing before 31 December 2024 as a result of the person’s membership of the multinational group or group, or

(b) a qualifying entity that has top-up amounts or additional top-up amounts for any accounting period commencing before 31 December 2024 as a result of the entity’s membership of the multinational group or group in respect of which a person is chargeable to domestic top-up tax.

(7) Where this sub-paragraph applies, a retrospection election may not be made without the written consent of each such person.

(8) For the purposes of sub-paragraph (6), the relevant assumptions are—

(a) that the retrospection election had been made, and

(b) that no election under section 271 of F(No.2)A 2023 had been made.

(9) Where—

(a) the filing member of a multinational group is not a responsible member of that multinational group, or

(b) there is more than one responsible member of that multinational group,

a retrospection election may not be made without the written consent of each responsible member.

(10) Sub-paragraph (11) applies where—

(a) the filing member of a multinational group or group has made a retrospection election,

(b) at the time the election was made it was reasonable for the filing member to consider that the consent of a person was not required,

(d) the filing member becomes aware that the consent of that person was, or may have been, required, and

(e) the written consent of that person is given within the period of 60 days beginning with the day on which the condition in paragraph (d) is first met.

(11) The consent of that person is to be treated as having been given before the election was made.

(12) References in this paragraph to a “group”, other than in the expression “multinational group”, are to a group for the purposes of Part 4 of F(No.2)A 2023 (domestic top-up tax).

Schedule 5

Part 1 — Amendments relating to income tax

FA 2004

1

Section 189 of FA 2004 (tax reliefs and exemptions in connection with registered pension schemes: meaning of relevant UK earnings) is amended as follows—

(a) in subsection (2) omit—

(i) paragraph (ba), and

(ii) paragraph (bb) (but not the “and” after it);

(b) omit subsections (5) to (6B).

ITTOIA 2005

2

(1) ITTOIA 2005 is amended as follows.

(2) In section 270 (charge on profits of property businesses), in subsection (5)—

(a) in the definition of “CAA allowances” omit “or 250A”;

(b) in the definition of “CAA charges”, for “either of those sections” substitute “that section”.

(3) In section 272B (meaning of “costs of a dwelling-related loan”)—

(a) in subsection (2) for “subsections (3) and (4)” substitute “subsection (3)”;

(b) omit subsection (4).

(4) In section 307B (cash basis: capital expenditure)—

(a) in subsections (6) and (7), omit “ordinary”;

(b) in subsection (8), for paragraph (a) substitute—

(a) “residential property” means land consisting of a dwelling-house or part of a dwelling-house in relation to which a UK property business or an overseas property business is carried on in the tax year, and

;

(5) In section 307E (cash basis: capital receipts)—

(a) in subsection (20)(a) for “sections 248 to 250A” substitute “sections 248 and 250”;

(b) in subsection (22)(a), for “section 15(1)(b) to (da)” substitute “section 15(1)(b) or (d)”.

(6) In section 311A (replacement domestic items relief)—

(a) in subsection (6), for “subsections (7) and (8)” substitute “subsection (8)”;

(b) omit subsection (7).

(7) In section 313 (restrictions on relief), omit subsection (3).

(8) Omit Chapter 6 of Part 3 (which defines “the commercial letting of furnished holiday accommodation”).

(9) In section 334C (unrelieved qualifying expenditure)—

(a) in subsection (1)(b), for “a relevant property business activity” substitute “the property business”;

(b) in subsection (3), for “each relevant property business activity” substitute “the property business”;

(10) In Part 2 of Schedule 4 (index of defined expressions), omit the entry for “commercial letting of furnished holiday accommodation (for purposes of Chapter 6 of Part 3)”.

ITA 2007

3

(1) ITA 2007 is amended as follows.

(2) In section 117 (overview of Chapter 4 of Part 4) omit subsections (2) and (2A).

(3) Omit—

(a) section 127 (UK furnished holiday lettings business treated as trade),

(b) section 127ZA (EEA furnished holiday lettings business treated as trade), and

(4) In section 388 (loan to buy plant or machinery for partnership use)—

(a) in subsection (2)(a) omit “ordinary”;

(b) in subsection (4), for ““ordinary property business”” substitute ““property business””.

(5) In section 389 (eligibility requirements for interest on loans), in subsection (4) omit “ordinary”.

(6) In section 399A (property partnerships: restriction of relief for investment loan interest) omit subsection (9).

(7) In section 836 (jointly held property), in subsection (3) omit exceptions D and DA.

Consequential repeals of amending provisions

4

The following provisions (which insert or amend provision relating to the commercial letting of furnished holiday accommodation) are repealed—

(a) in ITTOIA 2005—

(i) paragraph 196 of Schedule 1, and

(ii) paragraphs 74 and 75 of Schedule 2;

(b) in Schedule 1 to ITA 2007—

(i) paragraph 473(2)(a) and (b), and

(ii) paragraphs 508, 509 and 510;

(d) in FA 2016, section 73(5);

(e) in F(No.2)A 2017, paragraph 26 of Schedule 2.

Part 2 — Amendments relating to corporation tax

CTA 2009

5

(1) CTA 2009 is amended as follows.

(2) In section 202 (overview of Part 4) omit subsection (5).

(3) In section 250A (replacement domestic items relief) omit subsection (7).

(4) In section 252 (restrictions on relief) omit subsection (3).

(5) Omit Chapter 6 of Part 4 (which defines “the commercial letting of furnished holiday accommodation”).

(6) In section 748 (assets held for purposes of property business)—

(a) for subsection (4) substitute—

(4) In subsection (1), “property business” means— (a) a UK property business, or (b) an overseas property business.

;

(b) omit subsection (5).

(7) In Schedule 4 (index of defined expressions) omit the entry for “commercial letting of furnished holiday accommodation (in Chapter 6 of Part 4)”.

CTA 2010

6

(1) CTA 2010 is amended as follows.

(2) Omit section 65 (UK furnished holiday lettings business treated as trade).

(3) Omit section 67A (EEA furnished holiday lettings business treated as trade).

(4) In section 188DD (limitations on relief under section 188CB: determination of claimant’s relevant maximum), in subsection (2)(a) omit sub-paragraph (vii).

(5) In section 188ED (limitations on relief under section 188CC: determination of claimant’s relevant maximum), in subsection (2)(a) omit sub-paragraph (vii).

(6) In section 269ZF (restriction of certain deductions: determination of company’s qualifying trading profits), in subsection (4)(e) omit sub-paragraph (vii).

Consequential repeals of amending provisions

7

The following provisions (which insert or amend provision relating to the commercial letting of furnished holiday accommodation) are repealed—

(a) in CTA 2009, paragraphs 172 and 173 of Schedule 1;

(b) in CTA 2010, paragraphs 602 and 603 of Schedule 1;

(d) in FA 2016, section 73(7);

(e) in F(No.2)A 2017, paragraph 155 of Schedule 4.

Part 3 — Amendments relating to capital allowances

CAA 2001

8

(1) CAA 2001 is amended as follows.

(2) Omit section 13B (use for other purposes of plant or machinery: property businesses).

(3) In section 15 (qualifying activities)—

(a) in subsection (1)—

(i) in paragraph (b), for “an ordinary” substitute “a”;

(ii) omit paragraph (c);

(iii) in paragraph (d) omit “ordinary”;

(iv) omit paragraph (da);

(b) in subsection (3)—

(i) in paragraph (a), for “an ordinary” substitute “a”;

(ii) in paragraph (b) omit “ordinary”.

(4) Omit sections 16 to 17B (which define ordinary UK, or overseas, property business and UK, or EEA, furnished holiday lettings business).

(5) In section 28 (qualifying expenditure: thermal insulation of buildings), in subsections (1) and (2)—

(a) for “an ordinary UK”, in each subsection, substitute “a UK”;

(b) for “an ordinary overseas”, in each subsection, substitute “an overseas”.

(6) In section 33 (qualifying expenditure: personal security), in subsection (8)—

(a) in paragraph (b), for “an ordinary” substitute “a”;

(b) omit paragraph (c);

(d) omit paragraph (da).

(7) In section 35 (exclusion of certain expenditure on plant or machinery for use in a dwelling-house), in subsection (1)—

(a) in paragraph (a), for “an ordinary” substitute “a”;

(b) in paragraph (b) omit “ordinary”.

(8) In section 59 (unrelieved qualifying expenditure)—

(a) in subsection (4A), for “a relevant qualifying activity” substitute “the property business”;

(b) omit subsection (7A).

(9) In section 63 (cases in which disposal value of plant or machinery is nil), in subsection (3)—

(a) in paragraph (b), for “an ordinary” substitute “a”;

(b) omit paragraph (c);

(d) omit paragraph (da) (but not the “or” after it).

(10) In section 248 (treatment of allowances or charges in relation to UK property businesses)—

(a) in the heading omit “Ordinary”;

(b) in the words before paragraph (a), for “an ordinary” substitute “a”.

(11) Omit section 249 (giving effect to allowances and charges: UK furnished holiday lettings businesses).

(12) In section 250 (treatment of allowances or charges in relation to overseas property businesses)—

(a) in the heading omit “Ordinary”;

(b) in the words before paragraph (a) omit “Ordinary”.

(13) Omit section 250A (giving effect to allowances and charges: EEA furnished holiday lettings businesses).

(14) In section 270CA (qualifying activities)—

(a) in paragraph (b), for “an ordinary” substitute “a”;

(b) in paragraph (c) omit “ordinary”.

(15) Omit section 270CB (meaning of ordinary UK or overseas property business).

(16) In section 270CG (use for the purposes of a property business), in subsection (1)—

(a) for “an ordinary UK” substitute “a UK”;

(b) for “an ordinary overseas” substitute “an overseas”.

(17) In section 270HB (allowances to be treated as expense of property businesses)—

(a) in the heading omit “ordinary” in both places;

(b) in paragraph (a), for “an ordinary” substitute “a”;

(18) In section 536 (contributions not made by public bodies and not eligible for tax relief), in subsection (5)(a)—

(a) in sub-paragraph (i), for “an ordinary” substitute “a”;

(b) omit sub-paragraph (ii);

(d) omit sub-paragraph (iiia).

(19) In Part 2 of Schedule 1 (defined expressions) omit the entries for—

(a) “EEA furnished holiday lettings business”;

(b) “ordinary overseas property business”;

(d) “UK furnished holiday lettings business”.

Consequential repeals of amending provisions

9

The following provisions (which insert or amend provision relating to the commercial letting of furnished holiday accommodation) are repealed—

(a) in CAA 2001, paragraph 13 of Schedule 2;

(b) in ITTOIA 2005, paragraphs 527 and 528 of Schedule 1;

(d) in CTA 2010, paragraph 347 of Schedule 1;

(e) in FA 2011, Part 3 of Schedule 14.

Part 4 — Amendments relating to chargeable gains

TCGA 1992

10

(1) TCGA 1992 is amended as follows.

(2) In section 3A (gains connected to avoidance or foreign activities etc) omit subsections (3) to (5).

(3) In section 165A (meaning of “trading company” and “trading group”), in subsection (14), in the definition of “trade” omit “(subject to section 241(3))”.

(4) Omit—

(a) section 241 (UK furnished holiday lettings), and

(b) section 241A (EEA furnished holiday lettings).

Consequential repeals of amending provisions

11

The following provisions (which insert or amend provision relating to the commercial letting of furnished holiday accommodation) are repealed—

(a) in FA 1996, paragraph 62 of Schedule 20;

(b) in FA 1998—

(i) paragraph 62 of Schedule 5, and

(ii) paragraph 8 of Schedule 21;

(d) in ITTOIA 2005, paragraph 441 of Schedule 1;

(e) in ITA 2007, paragraph 325 of Schedule 1;

(f) in FA 2008—

(i) paragraph 37 of Schedule 2, and

(ii) paragraph 3 of Schedule 3;

(g) in CTA 2009, paragraph 380 of Schedule 1 to CTA 2009;

(h) in FA 2011, Part 4 of Schedule 14.

Part 5 — Commencement and transitional provision

Commencement: Parts 1 to 3

12

(1) The amendments made by Part 1 have effect for the purposes of income tax in relation to the tax year 2025-26 and subsequent tax years.

(2) The amendments made by Part 2 have effect for the purposes of corporation tax in relation to accounting periods beginning on or after 1 April 2025.

(3) The amendments made by Part 3 have effect—

(a) for the purposes of corporation tax, in relation to accounting periods beginning on or after 1 April 2025, and

(b) for the purposes of income tax, in relation to periods of account beginning on or after 6 April 2025.

Commencement: Part 4

13

(1) The amendments made by Part 4 have effect in relation to disposals made on or after the commencement date.

(2) The amendments made by Part 4 also have effect—

(a) for the purposes of sections 152 to 157 of TCGA 1992 (roll-over relief on replacement of business asset), in relation to acquisitions that take place on or after the commencement date, and

(b) for the purposes of section 253 of TCGA 1992 (relief for loans to traders), in relation to claims for a loss to be treated as accruing to a person on or after the commencement date.

(3) Sub-paragraph (1) is subject to paragraph 19 (business asset disposal relief: disposals relating to pre-commencement businesses).

(4) In this paragraph, “the commencement date” means—

(a) for the purposes of corporation tax, 1 April 2025, and

(b) for the purposes of capital gains tax, 6 April 2025.

Anti-forestalling: disposals under unconditional contracts

14

(1) Sub-paragraph (2) applies where—

(a) an asset is disposed of under an unconditional contract made during the pre-commencement period,

(b) the asset is conveyed or transferred on or after the commencement date, and

(2) The amendments made by Part 4 have effect in relation to the disposal unless—

(a) no purpose of entering into the contract was to avoid the amendments made by Part 4 having effect in relation to the disposal,

(b) either—

(i) the contract was entered into wholly for commercial reasons, or

(ii) the parties to the contract are not connected persons, and

(3) In this paragraph—

“the commencement date” means— for the purposes of corporation tax, 1 April 2025; for the purposes of capital gains tax, 6 April 2025;

“connected persons” is to be construed in accordance with section 286 of TCGA 1992;

“the pre-commencement period” means the period— beginning with 6 March 2024, and ending with the day before the commencement date;

“relevant claim” means— a claim under section 152 or 153 of TCGA 1992 (roll-over relief) or a declaration under section 153A of that Act (provisional application of sections 152 and 153), a claim under section 165 of TCGA 1992 (relief for gifts of business assets), or a claim under section 169M of TCGA 1992 (business asset disposal relief).

Corporation tax: accounting periods straddling 1 April 2025

15

(1) This paragraph applies where a company has an accounting period beginning before, and ending on or after, 1 April 2025 (“the straddling period”).

(2) For the purposes of this Schedule—

(a) so much of the straddling period as falls before 1 April 2025, and so much of that period as falls on or after 1 April 2025, are treated as separate accounting periods, and

(b) where it is necessary to apportion an amount for the straddling period to the two separate accounting periods, it is to be apportioned—

(i) in accordance with section 1172 of CTA 2010 (time basis), or

(ii) if that method would produce a result that is unjust or unreasonable, on a just and reasonable basis.

Carry-forward of losses: income tax

16

(1) This paragraph applies if—

(a) a person is treated as carrying on in the tax year 2024-25 a single trade by virtue of section 127(3) of ITA 2007 (UK furnished holiday lettings businesses) or section 127ZA(3) of that Act (EEA furnished holiday lettings businesses),

(b) the person has made a loss in that trade in the tax year 2024-25 or a previous tax year,

(c) relief for the loss has not been fully given under Chapter 2 of Part 4 of ITA 2007 (trade losses) or any other provision of the Income Tax Acts, and

(d) the person carries on a corresponding property business in the tax year 2025-26.

(2) So much of the loss as has not been relieved is to be treated for the purposes of section 118 of ITA 2007 (carry forward against subsequent property business profits) as if it had been made in the corresponding property business.

(3) In this paragraph, “corresponding property business” means—

(a) in relation to a loss made in a trade a person is treated as carrying on by virtue of section 127(3) of ITA 2007, a UK property business (within the meaning given by section 264 of ITTOIA 2005) carried on by that person;

(b) in relation to a loss made in a trade a person is treated as carrying on by virtue of section 127ZA(3) of ITA 2007, an overseas property business (within the meaning given by section 265 of ITTOIA 2005) carried on by that person.

Carry-forward of losses: corporation tax

17

(1) This paragraph applies if—

(a) a company is treated as carrying on in its last accounting period to begin before 1 April 2025 a single trade by virtue of—

(i) section 65(3) of CTA 2010 (UK furnished holiday lettings businesses), or

(ii) section 67A(3) of that Act (EEA furnished holiday lettings businesses),

(b) the company has made a loss in that trade in that accounting period or a previous one,

(c) but for the provision of this Schedule, all or part of the loss would fall to be carried forward under section 45 of CTA 2010 to an accounting period beginning on or after 1 April 2025, and

(d) the company carries on a corresponding property business in its accounting period beginning on 1 April 2025 (see paragraph 15).

(2) The loss or the part of the loss that would otherwise fall to be carried forward as mentioned in sub-paragraph (1)(c) is to be treated for the purposes of the relevant relieving provision as if it had been made by the company in its corresponding property business.

(3) For the purposes of this paragraph as it applies in relation to a trade a company is treated as carrying on by virtue of section 65(3) of CTA 2010—

(a) “corresponding property business” means a UK property business (within the meaning given by section 205 of CTA 2009), and

(b) “the relevant relieving provision” means section 62(5) of CTA 2010 (relief for losses made in UK property business).

(4) For the purposes of this paragraph as it applies in relation to a trade a company is treated as carrying on by virtue of section 67A(3) of CTA 2010—

(a) “corresponding property business” means an overseas property business (within the meaning given by section 206 of CTA 2009), and

(b) “the relevant relieving provision” means section 66(3) of CTA 2010 (relief for losses made in overseas property business).

Plant and machinery allowances

18

(1) This paragraph applies for the purposes of Part 2 of CAA 2001 (plant and machinery allowances) where—

(a) immediately before the end of a person’s pre-commencement chargeable period, the person is carrying on an FHL qualifying activity, and

(b) at the start of the person’s post-commencement chargeable period, the person is carrying on the corresponding property activity.

(2) The amount of any allowance or charge arising in the person’s post-commencement chargeable period or any subsequent chargeable period is to be calculated as if anything done by or to the person in carrying on the FHL qualifying activity had been done by or to the person in carrying on the corresponding property activity.

(3) In particular—

(a) where plant or machinery is in use for the purposes of the FHL qualifying activity immediately before the end of the person’s pre-commencement chargeable period—

(i) the plant or machinery is to be treated as if it had been brought into use for the purposes of the corresponding property activity on the day on which it was brought into use for the purposes of the FHL qualifying activity, and

(ii) its use for the purposes of the FHL qualifying activity is to be disregarded.

(b) where the person has unrelieved qualifying expenditure (within the meaning given by section 59 of CAA 2001) to carry forward from the person’s pre-commencement chargeable period in a pool for an FHL qualifying activity, the expenditure is to be—

(i) carried forward to the person’s post-commencement chargeable period, and

(ii) allocated to the appropriate pool for the corresponding property activity.

(4) Accordingly, the person is not to be taken, by reason only of the effect of the amendments made by this Schedule, as having—

(a) brought plant or machinery into use, or ceased to use plant or machinery, for the purposes of a qualifying activity, or

(b) permanently discontinued a qualifying activity.

(5) Section 35 of CAA 2001 (expenditure on plant or machinery for use in dwelling-house not qualifying expenditure) does not apply to expenditure carried forward in accordance with sub-paragraph (3)(b)(i).

(6) In this paragraph—

“FHL qualifying activity” means a UK furnished holiday lettings business or an EEA furnished holiday lettings business;

“the corresponding property activity” means— in relation to a UK furnished holiday lettings business carried on by a person, a UK property business carried on by that person, and in relation to an EEA furnished holiday lettings business carried on by a person, an overseas property business carried on by that person;

“pre-commencement chargeable period” means— for corporation tax purposes, a company’s last accounting period to begin before 1 April 2025, and for income tax purposes, the tax year 2024-25;

“post-commencement chargeable period” means— for corporation tax purposes, the accounting period beginning on 1 April 2025 (see paragraph 15), and for income tax purposes, the tax year 2025-26.

(7) Expressions used in sub-paragraph (6) have the same meaning as in Part 2 of CAA 2001.

Business asset disposal relief: disposals relating to pre-commencement businesses

19

The amendments made by this Schedule do not have effect in relation to a disposal made on or after 6 April 2025 if it is—

(a) a disposal of business assets within section 169I(2)(b) of TCGA 1992 (assets used for purposes of business) where the date on which the business ceases to be carried on is before 6 April 2025;

(b) a disposal of business assets within section 169I(2)(c) of TCGA 1992 (shares in or securities of a company) where—

(i) the disposal is a material disposal by virtue of condition B in section 169I(7) of that Act or condition D in section 169I(7B) of that Act, and

(ii) the period of 2 years mentioned in condition B or condition D (as the case may be) ends before 6 April 2025;

(i) assets consisting of (or of interests in) shares in or securities of a company in relation to which the period of 2 years mentioned in section 169J(4) of that Act ends before 6 April 2025, or

(ii) assets (or interests in assets) used or previously used for the purposes of a business in relation to which the period of 2 years mentioned in section 169J(5) of that Act ends before 6 April 2025;

(d) a disposal associated with a relevant material disposal within section 169K(1) of TCGA 1992, where the date of the material disposal of business assets with which the disposal is associated is before 6 April 2025.

Post-commencement disposals by companies with substantial shareholding

20

(1) Paragraph 3 of Schedule 7AC to TCGA 1992 (exemptions for disposals by companies with substantial shareholding: main conditions previously met) has effect in relation to a disposal made on or after 1 April 2025 in accordance with sub-paragraph (2).

(2) In determining whether the condition in sub-paragraph (2)(d) of that paragraph of that Schedule is met, sections 241 and 241A of TCGA 1992 (commercial letting of furnished holiday accommodation to be treated as a trade) are to be disregarded.

Schedule 6

Part 1 — Capital gains tax

Introduction

1

TCGA 1992 is amended as follows.

Requirement for trustees of employee-ownership trusts to be UK resident

2

(1) In section 236H(4) (disposals to employee-ownership trusts), before paragraph (a) insert—

(za) that the trustees of the settlement are resident in the United Kingdom at the time of the disposal and continue to be UK resident for the remainder of the tax year in which that time falls,

(2) In section 236O(2) (no section 236H relief if disqualifying event in next tax year), before paragraph (a) insert—

(za) the trustees of the settlement cease to be resident in the United Kingdom,

(3) In section 236P (events which trigger deemed disposal and reacquisition by trustees), after subsection (3) insert—

(3A) See also section 80 (trustees ceasing to be resident in U.K.), which provides for similar consequences in circumstances where the trustees of the settlement cease to be resident in the United Kingdom.

(4) In section 236Q(1)(c) (relief for deemed disposals under section 71), for “236H(4)(a)” substitute “236H(4)(za)”.

(5) The amendments made by this paragraph have effect in relation to disposals made on or after 30 October 2024.

Trustee independence

3

(1) In section 236H(4), after paragraph (b) insert—

(ba) that the settlement meets the trustee independence requirement (see section 236LA) at the time of the disposal and continues to meet that requirement for the remainder of the tax year in which that time falls,

(2) After section 236L insert—

(236LA) (1) A settlement meets the trustee independence requirement if— (a) less than 50% of the trustees are persons who are excluded participators, and (b) excluded participators do not have control of the settlement. (2) In this section “excluded participator” means— (a) a person that is an excluded participator within the meaning given by section 236J, other than a person who is an excluded participator only as a result of a connection falling within section 286(3) (trustees regarded as connected with settlors etc), or (b) a company not falling within paragraph (a), if 50% or more of its directors are persons falling within that paragraph. (3) Excluded participators have control of the settlement if one or more excluded participators, acting alone or together without the trustees who are not excluded participators, have power under the trust instrument or by law to— (a) dispose of, advance, lend, invest, pay or apply settlement property; (b) vary or terminate the settlement; (c) add or remove a person as a beneficiary or to or from a class of beneficiaries; (d) appoint or remove trustees or give another individual control over the settlement; (e) direct the exercise of a power mentioned in sub-paragraphs (a) to (d).

(3) In section 236O(2), after paragraph (b) insert—

(ba) the settlement ceases to meet the trustee independence requirement,

(4) In section 236P(2) (events which trigger deemed disposal and reacquisition by trustees), after paragraph (b) insert—

(ba) the settlement ceases to meet the trustee independence requirement,

(5) The amendments made by this paragraph have effect in relation to disposals made on or after 30 October 2024.

Temporary breach of trustee independence requirement or residence requirement arising from death of trustee

4

(1) In section 236O, after subsection (2) insert—

(2A) Where— (a) a disqualifying event falling within subsection (2)(za) occurs (trustees cease to be resident in the United Kingdom), (b) the event only occurs as a result of the death of a trustee of the settlement, and (c) within the period of 6 months beginning with the death of the trustee, the trustees become resident in the United Kingdom, the disqualifying event is to be ignored. (2B) Where— (a) a disqualifying event falling within subsection (2)(ba) occurs (trustee independence requirement ceases to be met), (b) the event only occurs as a result of— (i) the death of a trustee of the settlement, or (ii) the death of a director of a company that is a trustee of the settlement, and (c) within the period of 6 months beginning with that death, the settlement meets the trustee independence requirement, the disqualifying event is to be ignored.

(2) In section 236P, after subsection (2) insert—

(2A) Where— (a) a disqualifying event falling within subsection (2)(ba) occurs (trustee independence requirement ceases to be met), (b) the event only occurs as a result of— (i) the death of a trustee of the settlement, or (ii) the death of a director of a company that is a trustee of the settlement, and (c) within the period of 6 months beginning with that death, the settlement meets the trustee independence requirement, the disqualifying event is to be ignored.

(3) The amendments made by this paragraph have effect in relation to disposals made on or after 30 October 2024.

Consideration requirement

5

(1) In section 236H(4), after paragraph (c) insert—

(ca) that the trustees have taken all reasonable steps to secure that— (i) the consideration for the disposal does not exceed the market value of the ordinary share capital at the time of the disposal, and (ii) where some or all of the consideration for the disposal is deferred, that the rate of any interest payable in relation to the deferral does not exceed a reasonable commercial rate,

(2) In section 236Q, in subsection (1)(c), for “(d)” substitute “(c) and (d)”.

(3) The amendments made by this paragraph have effect in relation to disposals made on or after 30 October 2024.

Extended period for disqualifying events

6

(1) In section 236O—

(a) in the heading, for “tax year” substitute “four tax years”, and

(b) in subsection (1)(b), for “the tax year” substitute “any of the first four tax years”.

(2) In section 236P(1), after “end of the” insert “fourth”.

(3) In section 236R—

(a) in the heading, for “tax year” substitute “four tax years”, and

(b) in subsection (1)(b), for “the tax year” substitute “any of the first four tax years”.

(4) The amendments made by this paragraph have effect in relation to disposals made on or after 30 October 2024.

Additional information to be provided in claims

7

(1) In section 236H—

(a) in subsection (7)—

(i) omit the “and” after paragraph (b),

(ii) after that paragraph insert—

(ba) the number of persons who at the time of the disposal are employees of— (i) C, or (ii) if C is the principal company of a trading group (within the meaning of section 236I(3)), any member of that group,

, and

(iii) after paragraph (c) insert

, and (d) the consideration for the disposal (including amounts of consideration due after the disposal).

, and

(b) after that subsection insert—

(7A) But where the person making the claim is unable to include the number of employees in the claim as required by subsection (7)(ba) because they have been unable to ascertain that number, that requirement is to be taken to be met if— (a) the person has taken all reasonable steps to ascertain that number, and— (b) the claim contains a statement that the person has taken such steps.

(2) In section 236Q—

(a) in subsection (6)—

(i) omit the “and” after paragraph (b), and

(ii) after that paragraph insert—

(ba) the number of persons who at the time of the deemed disposal are employees of— (i) the company, or (ii) if the company is the principal company of a trading group (within the meaning of section 236I(3)), any member of that group, and

, and

(b) after that subsection insert—

(6A) But where the person making the claim is unable to include the number of employees in the claim as required by subsection (6)(ba) because they have been unable to ascertain that number, that requirement is to be taken to be met if— (a) the person has taken all reasonable steps to ascertain that number, and— (b) the claim contains a statement that the person has taken such steps.

(3) The amendments made by this paragraph have effect in relation to claims made under those sections on or after 6 April 2025.

Part 2 — Income tax

Participation requirement not infringed by exclusion of directors

8

(1) In section 312C of ITEPA 2003, after subsection (2) insert—

(2A) The participation requirement is not infringed by reason of the exclusion of directors of the company from participating in an award.

(2) The amendment made by this paragraph has effect in relation to qualifying bonus payments made on or after 30 October 2024.

Relief for distributions to trustees of employee-ownership trusts

9

(1) In ITTOIA 2005, after section 401 insert—

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