Transfer pricing rules also apply to financing arrangements where the participation condition is met, the actual provision differs from the arm’s length provision and a potential UK tax advantage arises. Loans between companies under common control, or where one controls the other, may therefore require an adjustment. The small and medium-sized enterprise exemption remains available, subject to its exceptions. For chargeable periods beginning on or after 1 January 2026, qualifying UK-to-UK provisions are also exempt, subject to statutory conditions. See the Transfer pricing rules ― overview guidance note.

Transfer pricing adjustments are brought into account under the loan relationships rules, and transfer pricing applies before the corporate interest restriction. However, other loan relationships provisions, including the unallowable purpose rule, must be considered when determining whether a potential UK tax advantage exists. See the Corporate interest restriction ― overview guidance note.

The same principles of transfer pricing, as set out in the UK transfer pricing in practice guidance note, apply to financing transactions. Additional details and examples are provided in Chapter X of the OECD Transfer