The UK government has consistently sought to position the UK as one of the world's most attractive environments for innovation and enterprise. This has involved developing a number of tax benefits incentivising innovative businesses at both investor and business level and for businesses at each stage of their life cycle. These tax benefits include: • R&D tax reliefs • the patent box • business asset disposal relief (formerly entrepreneurs' relief) • amortisation deductions for purchases of intellectual property by companies • capital allowances for purchases of: ◦ knowhow ◦ patents, and ◦ plant and machinery • venture capital trusts • enterprise investment scheme, and • seed enterprise investment scheme This Practice Note sets out the UK perspective on various tax issues that should be taken into account in deciding how an innovative IP business with international or global ambition might be structured. The points below are generic and effectively assume a blank

Law360: The increasingly complex UK tax code has led to businesses paying at least £15.4bn annually to comply with the system, and that figure is likely an understatement, the National Audit Office (NAO) said on 10 February 2025.

FORTHCOMING CHANGE relating to double tax treaty relief: The government is exploring options to potentially simplify the process and administration of double tax treaty (DTT) relief from UK withholding tax on payments of UK source yearly interest to non-UK lenders. For more information on the consultation published on 13 July 2026, see News Analysis: Legislation Day: Draft Finance Bill 2027—Tax analysis—Finance. FORTHCOMING CHANGE relating to UK transfer pricing: As part of various changes to the UK transfer pricing legislation within the Finance Act 2026, HMRC has been authorised to issue regulations requiring in-scope multinationals to report information annually on cross-border related party transactions for accounting periods beginning on after 1 January 2027 (see News Analysis: Budget 2025—Tax analysis—International). The technical regulations for this new ‘International Controlled Transactions Schedule’ (ICTS), along with a draft ICTS notice and template, were published on 16 June 2026 and are subject to consultation. FORTHCOMING CHANGE relating to the modernisation of stamp taxes on shares

Law360, London: Planned increases in HMRC’s staffing and overall capabilities, including 400 people to focus on risks posed by offshore wealth, are expected to generate an additional £500m in added tax compliance revenue by the 2029–30 tax year, the British tax agency said.

Law360: The UK tax authority launched more criminal cases for tax fraud for the year ended 30 June 2023, increasing 49% from 63 cases for the previous year to 94, Pinsent Masons LLP said 24 June 2024.

FORTHCOMING CHANGE relating to reverse hybrids: On 10 June 2026, the government opened a consultation on proposals which, if implemented, would allow UK resident individual members of US limited liability companies, and other reverse hybrid entities, to treat their holding on a transparent basis for UK income tax and capital gains tax purposes. This is intended to mitigate the high effective tax rates currently suffered by such members as a consequence of having to pay tax on a transparent basis in a foreign jurisdiction, but that entity being classified as opaque in the UK, with the result that double tax relief is not available. The tax treatment for corporation tax purposes would remain unchanged. An overseas entity may be characterised for UK tax purposes as transparent or opaque. This Practice Note explains how such classification will affect how the entity is taxed, and how the members of the entity are taxed. UK legislation provides little guidance on whether an overseas entity is to be treated as

This Practice Note briefly summarises the main UK taxes which may apply to UK resident individuals, including income tax, capital gains tax (CGT), inheritance tax (IHT), value added tax (VAT), national insurance contributions (NICs), the annual tax on enveloped dwellings (ATED), non-resident CGT and stamp duty land tax (SDLT). Residence and UK tax liability From 6 April 2025 UK tax liability depends on residence. Before that date, an individual’s domicile was also a relevant factor in determining an individual’s liability to IHT on foreign situs assets, as well as establishing whether the remittance basis could be applicable to the taxation of foreign income and gains. For information on these changes, see Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence-based regime for IHT from 2025–26. See also Practice Notes: Domicile for UK tax purposes before 6 April 2025 [Archived] and The remittance basis—summary [Archived]. Residence refers to the individual's tax status on a year by year basis. A person coming to the UK other than for a one-off short visit,

FORTHCOMING CHANGE: On 21 May 2026, the government published a policy paper containing plans to make the foreign branch exemption mandatory for UK-resident companies that conduct part of their business through foreign PEs and on 13 July 2026 draft legislation for the measure was published. For accounting periods beginning on or after 1 January 2027, companies will be required to calculate their total taxable profits on the basis that a foreign branch exemption election has been made. The draft legislation also includes (i) restrictions on the future use of carried-forward losses attributable to foreign PEs from periods before the new regime takes effect and (ii) a targeted anti-avoidance rule (effective from 13 July 2026) to counteract tax advantages arising from arrangements designed to accelerate losses or circumvent the commencement or operation of, or exploit shortcomings in, the new regime. Many UK resident companies likely operate entirely within the boundaries of the UK, with all of their customers and suppliers being based in the UK, such that all

STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime Finance Act 2025 (FA 2025) which received Royal Assent on 20 March 2025, implements legislation to abolish the remittance basis of taxation and replace it with a residence-based regime, commencing on 6 April 2025. FA 2025 also replaces domicile as the key factor in establishing liability to inheritance tax. Other changes include amendment of the rules determining excluded property status, the abolition of protected settlements status of offshore trusts, and changes to overseas workday relief. For information on these changes, see Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence-based regime for IHT from 2025–26. See also: Finance Bill Tracking Service: Key dates (Finance Bill 2025) and Finance Act 2025. ARCHIVED: The contents of this archived Practice Note reflect the law as it applies up to 6 April 2025 and many of the provisions described below will no longer

This Practice Note has been archived and is not maintained. STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime Finance Act 2025 (FA 2025) which received Royal Assent on 20 March 2025, implements legislation to abolish the remittance basis of taxation and replace it with a residence-based regime, commencing on 6 April 2025. FA 2025 also replaces domicile as the key factor in establishing liability to inheritance tax. Other changes include amendment of the rules determining excluded property status, the abolition of protected settlements status of offshore trusts, and changes to overseas workday relief. For information on these changes, see Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence-based regime for IHT from 2025–26. See also: Finance Bill Tracking Service: Key dates (Finance Bill 2025) and Finance Act 2025. The contents of this Practice Note reflect the law as it applies up to 6 April 2025. The definition of an excluded

An offshore trust is a trust with non-UK resident trustees. The liability of trustees of an offshore trust to UK inheritance tax (IHT) is not dependent on the residence status of the trustees. Instead, IHT treatment broadly turns on the nature or location of the trust assets and the residence status of the settlor. Offshore trustees will generally be liable to IHT on all UK trust assets and on foreign trust property unless that property qualifies as 'excluded property' within the meaning of section 6 of the Inheritance Tax Act 1984. Prior to 6 April 2025, non-UK assets of a trust created by a settlor who was non-UK domiciled at the time the trust was settled were generally excluded property and outside the scope of IHT charges even if the settlor subsequently became domiciled or deemed domiciled in the UK. For information on the domicile rules which applied before 6 April 2025, see Practice Note: Domicile for UK tax purposes before 6 April 2025 [Archived]. From

Law360: The UK needs pension reform to avert a looming crisis that threatens a secure retirement for pensioners, according to a report by consultancy firm Mercer released on 29 August 2024.