From April 2019, the profit fragmentation Rules aim to prevent UK-resident individuals, including individual members of a partnership, and UK-resident companies who carry on a trade or profession subject to UK tax, from avoiding UK tax by diverting UK-taxable business Profits to entities resident in jurisdictions where significantly lower tax is paid than in the UK. Where the rules apply, the diverted profits are added to the profits of the UK trade by way of counteraction.

The measures have effect from 1 April 2019 onwards for corporation tax and 6 April 2019 for income tax and class 4 National insurance contributions (NICs), and apply to all profits diverted on or after that date.