UK updates top-up tax rules to align with OECD Pillar Two guidance, effective mostly from 31 December 2025.
UK HMRC has released a policy paper on 21 July 2025 outlining additional changes to the Multinational Top-up Tax and the Domestic Top-up Tax.
The updates aim to bring UK legislation in line with the OECD’s administrative guidance issued in January 2025 and to maintain consistency with the GloBE rules’ related commentary and guidance.
The Multinational Top-up Tax and Domestic Top-up Tax are the UK’s implementation of the Global Anti-Base Erosion (GloBE) rules agreed by the UK and other members of the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting.
This measure updates UK legislation in line with administrative guidance published by the OECD in January 2025. It also makes amendments identified from stakeholder consultation and those necessary to ensure the UK’s legislation remains consistent with the commentary and administrative guidance to the GloBE rules agreed by the UK and other members of the Inclusive Framework.
This measure is part of Pillar two of the two-pillar solution to reform the international tax framework, which was developed by the UK and other members of the Inclusive Framework.
It ensures that UK legislation remains consistent with the agreed GloBE rules, commentary and administrative guidance.
The measure will generally apply to accounting periods starting on or after 31 December 2025. However, certain provisions may be applied earlier if elected by the taxpayer. Notably, changes concerning the treatment of pre-regime deferred tax assets will apply to accounting periods ending on or after 21 July 2025.
