Transfer pricing

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FORTHCOMING CHANGE relating to UK transfer pricing legislation: On 29 April 2025, the UK government published draft legislation for technical consultation which proposes several changes to UK transfer pricing rules (as well as to the UK rules on permanent establishment and the diverted profits tax). These include, amongst other changes, the removal of UK-to-UK transfer pricing (subject to some exceptions to prevent opportunities for tax arbitrage), amendments to the participation condition, and various changes to the provisions governing financial transactions. The draft legislation follows an initial policy consultation on reform in this area launched by the Conservative government in 2023, and the announcement of follow-up consultations by the Labour government at Autumn Budget 2024. A further consultation was also launched on 29 April 2025 on proposals to restrict the existing exemption for SMEs to small enterprises only and introduce a new filing obligation for in-scope multinationals. At Autumn Budget 2024 the government announced that it would be reviewing the transfer pricing treatment of cost contribution arrangements, where the costs and benefits of developing intellectual property are shared by group companies, but no further developments in this area were announced

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