Doing Business In... 2026 Comparisons

The UK is a common-law jurisdiction, primarily built on case law, where the outcomes of previous legal cases set precedents for future cases. The UK courts are arranged in a hierarchy. At the base are magistrates’ courts and county courts, dealing with minor criminal offences and civil matters, respectively. Above these are the Crown Court and High Court, which handle more serious criminal cases and significant civil disputes.

The Court of Appeal sits above these courts and reviews cases from them to ensure the correct application of law. The Supreme Court is the highest court in the UK; it provides final judgments on points of national importance and clarifies laws that affect everyone.

There are also specialist tribunals – eg, for employment and immigration. These tribunals make decisions within their specific field but can be appealed to the higher courts.

While judges create common law, statues passed by the UK Parliament take precedence over all case law. This combination of statute law and common law ensures both a democratic input from Parliament and a detailed interpretation by judges based on precedent.

While the UK does not have a specific foreign investment regime, in 2022 it introduced the National Security and Investments Act 2021 (NSIA), which applies to investors of any country, including UK investors. There is a requirement for a mandatory notification if the target is active in one of 17 key sectors of the economy (and within the definition of those sectors in the Act). Clearance must be obtained prior to closing (with substantial fines for non-compliance).

The 17 sectors are:

• advanced materials;
• advanced robotics;
• artificial intelligence (AI);
• civil nuclear;
• communications;
• computing hardware;
• critical suppliers to government;
• cryptographic authentication;
• data infrastructure;
• defence;
• energy;
• military and dual use;
• quantum technologies;
• satellite and space technologies;
• suppliers to the emergency services;
• synthetic biology; and
• transport.

Notifiable transactions are those where there is an increase in shareholding or voting rights from:

• 25% or less to more than 25%;
• 50% or less to more than 50%;
• less than 75% to 75% or more; or
• the acquisition of voting rights that enables or prevents the passing of any class of resolution governing the affairs of the entity being acquired.

The Act also introduces a voluntary filing if the target is outside the definitions of the 17 key sectors, or is active in any sector but there are national security issues. Since filing is voluntary, there is no obligation to wait for approval before completing. However non-notified transactions that raise national security concerns might be called in for review by the government. Asset deals and IP licensing transactions can be subject to call-in if they raise national security issues, and it is possible to notify voluntarily.

The Act has extraterritorial application (therefore, for example, it will apply to acquisitions in the USA, Canada, EU, China or any other jurisdictions of non-UK entities that conduct activities in the UK or supply goods and services in the UK, even if they do not have a direct presence there).

Notifications are made to a dedicated government unit in the Cabinet Office, the Investment Security Unit (ISU), through a digital portal. The form to complete is not overly complex and, within a couple of weeks, the ISU will confirm whether the filing is accepted or if more information is needed. Once the Secretary of State confirms acceptance, a review period of 30 working days will start. This could end with a clearance or a call-in for an assessment period of a further 30 working days, at the end of which there can be clearance, clearance with conditions, prohibition or an extension of 45 working days for further review. With possible suspensions during the assessment period, full national security scrutiny can be estimated to be up to 21 weeks, or longer with the parties' agreement.

Closing a transaction that is subject to mandatory notification without notifying and obtaining clearance carries a heavy fine of up to 5% of the total global turnover of the acquirer, or GBP10 million (whichever is greater), and imprisonment of up to five years, and the transaction becomes void.

The government has accepted commitments in several cases – eg, requiring certain capabilities to remain in the UK, information barriers for sensitive information and restricted access to sensitive areas.

If a company wishes to challenge certain decisions of the Secretary of State – eg, to approve, block or unwind a transaction – it can apply for a judicial review of the decision.

Judicial review is the mechanism by which the courts review the lawfulness of a decision taken by a public body. An application for judicial review can be brought on the grounds of illegality, procedural unfairness or unreasonableness/irrationality, or for a breach of a right protected by the European Convention of Human Rights.

Normally, an application for judicial review must be made “promptly and in any event within three months” of the decision under challenge. However, the NSIA modifies the term, and an application must be made within 28 days of any decision (extendable in exceptional circumstances).

The three most common types of corporate vehicles in the UK are:

• a private company (Ltd) limited by shares;
• a public limited company (PLC); and
• a limited liability partnership (LLP).

There are other corporate vehicles – eg, companies limited by guarantee, unlimited companies, community interest companies and charitable incorporated organisations – but these are less common.

Private Limited Companies

A UK private limited company is typically governed by one or more directors and operates in accordance with its Articles of Association, as prescribed by the Companies Act 2006 (CA2006). The liability of shareholders is limited, meaning that their financial responsibility for company debts does not exceed the unpaid amount on their shares.

A private limited company does not have a minimum share capital requirement, though it must always have at least one share in issue, and there must always be at least one shareholder. These companies are best suited to SMEs and are particularly appropriate for family businesses, start-ups and businesses seeking to keep their affairs private from public scrutiny.

Public Limited Companies

A UK PLC is governed by the CA2006. Many PLCs are admitted on a stock market, typically the London Stock Exchange or the AIM Market, which will mean an additional regulatory framework applies (depending on the relevant market). A PLC must appoint at least two directors and a qualified company secretary. It is managed by a board of directors and is subject to more stringent regulations than a private limited company. A PLC must have a minimum of two shareholders, and shareholders’ liability is limited to the amount that remains unpaid on the shares they hold. The minimum share capital threshold for a PLC is GBP50,000, with at least 25% of the nominal capital (and the whole of any premium) being paid up in cash upon incorporation. This type of entity is suitable for larger ventures looking to attract investment from public markets – being able to raise capital through equity offerings and sell shares to the public offers substantial opportunities for growth and expansion, making it an attractive option for businesses with ambitious scaling plans.

Some companies may start as private companies limited by shares and re-register as a PLC later, perhaps because they are looking to list on a public market.

Limited Liability Partnerships

An LLP is a type of corporate vehicle that merges the flexibility of a partnership (as it is taxed as a partnership) with the benefits of limited liability for its members. The governance structure of an LLP is administered directly by its members, usually pursuant to an LLP agreement, which sets out each member’s responsibilities, obligations and share of profits.

Members of an LLP enjoy limited liability protection – their personal exposure for the debts incurred by the LLP does not extend beyond their individual investments into the LLP unless they engage in wrongdoing or personal negligence. There are no statutory rules regarding minimum capital contributions in an LLP, but an LLP must always have at least two members. In the UK, LLPs are particularly favoured by professional services firms, including law practices and accountants.

The steps and timing for the incorporation of entities in the UK depend on the type of entity that has been chosen. All private limited companies, PLCs and LLPs must be registered at Companies House, the UK’s registrar of companies, which operates under the CA2006. Online registration with Companies House is typically processed within 24 hours, while postal applications may take 8–10 days. A fee is payable. The information required for each is as follows.

• Limited companies:
1. name – an appropriate company name that conforms with Companies House regulations must be chosen;
2. documentation – the necessary documents, including the memorandum of association and articles of association, must be prepared;
3. identity verification – all proposed directors who are individuals must verify their identity (using one of the Companies House-approved routes) prior to incorporation (if they have not done so already for another entity) and provide their personal code as proof;
4. forms – Form IN01 must be completed, with details including the registered office, email address, principal business activities, director(s), secretary (if any), shareholder(s), person(s) with significant control, share capital and confirmation of lawful purpose; and
5. registration – once the application has been processed by Companies House, a certificate of incorporation will be received confirming the legal existence of the private limited company.
• PLCs:
1. name – an appropriate company name that conforms with Companies House regulations must be chosen;
2. documentation – the necessary documents, including the memorandum of association and articles of association, must be prepared;
3. identity verification – all proposed directors who are individuals must verify their identity prior to incorporation (if they have not done so already) and provide their personal code;
4. forms – Form IN01 must be completed, with details including the registered office, email address, principal business activities, directors (at least two), secretary, shareholder(s), person(s) with significant control, share capital and confirmation of lawful purpose;
5. minimum share capital – it must be ensured that there is a minimum allotted share capital of GBP50,000 (or the specified euro equivalent) with at least 25% of the nominal capital (and the whole of any premium) paid up in cash upon incorporation;
6. registration – once the application has been processed by Companies House, a certificate of incorporation will be received confirming the legal existence of the PLC;
7. trading certificate – before starting business or borrowing money, a trading certificate must be obtained from Companies House by demonstrating that the PLC has met the minimum share capital requirements, which can take several weeks after registration; and
8. listing – if the PLC is to be listed on a stock market, various requirements will need to be met, including the publication of a prospectus (or multilateral trading facility (MTF) admission prospectus) and there are ongoing rules and obligations; timing for this step can vary depending on market conditions and the PLC’s readiness to list.
• LLPs:
1. name – an appropriate LLP name that conforms with Companies House regulations must be chosen;
2. designated members – at least two members must be chosen to be designated members, who are responsible for statutory compliance duties;
3. documentation – an LLP agreement is optional but recommended;
4. identity verification – all proposed members who are individuals must complete identity verification (if they have not done so already) and provide their personal code;
5. forms – Form LL IN01 must be completed, with details including the registered office, email address and information about its members and any person(s) with significant control; and
6. registration – once the application has been processed by Companies House, a Certificate of Incorporation will be issued confirming the legal existence of the LLP.

UK companies are subject to various ongoing reporting and disclosure obligations, which aim to ensure transparency and accountability.

Private limited companies, PLCs and LLPs are required to inform Companies House about any changes in directors or secretaries, amendments to articles, changes to share capital or beneficial ownership and certain resolutions of the shareholders. These filings must be made with Companies House within certain deadlines, often 14–30 days from the relevant event or change. Private limited companies, PLCs and LLPs need to file annual financial statements and annual confirmation statements.

Financial statements should reflect an accurate financial position and be filed within nine months of the end of their accounting reference period for companies and LLPs, or within six months for PLCs. Confirmation statements must be filed on a yearly basis to confirm that all information about the business held by Companies House is current and correct, including details on management, share capital, shareholders and the people with significant control. Filing misleading or false statements at Companies House, without reasonable excuse, is a criminal offence.

For PLCs, there are a number of further reporting and disclosure requirements that are set out by the market regulators.

If companies fail to comply with their ongoing reporting and disclosure obligations, various penalties and consequences may apply.

In the UK, entities are typically organised under a one-tier system, with a single board of directors responsible for both the strategic direction and the day-to-day management. Combining oversight with active management in a single body streamlines the decision-making process.

The board of directors is usually made up of executive and non-executive directors – executive directors are responsible for the daily operations of the company, and the non-executive directors bring an independent perspective and oversee the performance of the executive directors.

Directors and officers of both private companies and PLCs have fiduciary duties towards the company, which include acting within their powers, promoting the success of the company for its members’ benefit, exercising independent judgment and reasonable care, skill and diligence and avoiding conflicts of interest. The main rules that govern the duties of directors in the UK are set out in the CA2006.

If directors breach their fiduciary duties, they could face civil proceedings. In some cases, criminal liability may arise under company or insolvency legislation – eg, for fraud, wrongful trading or false filings at Companies House (or some other CA2006 breaches). If a PLC is listed on a stock market, its directors could face criminal liability for breaches of financial services or market regulation – eg, the Market Abuse Regulations, Financial Services and Market Act 2000 or Criminal Justice Act 1993.

In addition, there are some areas of legislation that impose personal liability on a company’s directors for actions by the company or associated people, including in relation to health and safety, environmental matters, bribery, fraud, tax evasion and corporate manslaughter.

The principle known as “piercing (or lifting) the corporate veil” exists in English law. Typically, a company is seen as a distinct entity from its shareholders, although the court may decide to pierce this “veil”. This principle is only applied by courts in exceptional circumstances where the company has been used as a vehicle for fraud or improper conduct, or where the individuals behind a company have abused the corporate structure to shield themselves from liability or to perpetrate wrongdoing. Case law provides that it can only be justified when the more conventional remedies are all seen to be inadequate.

The legal rules governing the employment relationship are multifaceted and can be categorised as follows.

Statutory Law

This comprises legislation enacted by Parliament that sets out various rights and obligations for employers and employees. Key statutes include the Employment Rights Act 1996 (ERA1996), the Equality Act 2010 (EA2010), the Health and Safety at Work etc. Act 1974 and the Employment Rights Act 2025 (ERA2025). The ERA2025 represents a significant overhaul of UK employment law. It came into force on 18 December 2025; however, many of the changes will only take effect in 2026 and 2027.

The following laws, depending on the stage of employment in question, are of particular note.

• Recruitment:
1. EA2010;
2. Rehabilitation of Offenders 1974; and
3. the Data Protection Act (DPA) 1998.
• Pre-employment checks:
1. the Safeguarding Vulnerable Groups Act 2006; and
2. the Immigration, Asylum and Nationality Act 2006.
• Employment offer:
1. ERA1996;
2. the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations 2002; and
3. the Part Time Workers (Protection from Less Favourable Treatment) Regulations 2000.
• Training and development:
1. EA2010;
2. ERA1996;
3. the Education and Skill Act 2008; and
4. the Employees Study and Training Regulations 2010.
• Change in personal circumstances:
1. ERA1996;
2. ERA2025;
3. the Flexible Working Regulations 2014; and
4. the Employment Act 2002.
• Performance management:
1. EA2010; and
2. ERA1996.
• Industrial action:
1. ERA2025;
2. the Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A1992);
3. the Strikes (Minimum Service Levels) Act 2023; and
4. the Conduct of Employment Agencies and Employment Business (Amendment) Regulations 2022.
• Mergers and acquisitions:
1. the Transfer of Undertakings (Protection of Employment) Regulations 2006.
• End of employment:
1. ERA1996;
2. ERA2025;
3. EA2010;
4. TULR(C)A1992; and
5. the Collective Redundancies and the Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 1999.

Other Sources of Law and Regulation

The following are also important sources of legal rules that govern employment relationships.

• Case law (common law): The UK uses a common law system whereby judges make decisions interpreting statutes and cases establishing legal principles. Case law establishes precedent, which is then followed by other tribunals deciding employment disputes.
• Collective bargaining agreements: These are agreements made between employers (or employers’ organisations) and trade unions representing workers. They govern key employment terms including pay, working hours, holidays and other working conditions.
• Employment contracts: Individual contracts between an employer and employee establish the contractual terms that apply to the employment relationship including duties, remuneration, benefits and termination procedures.
• Regulatory materials: Guidance from regulatory bodies, including the Health & Safety Executive or Information Commissioner’s Office, also plays a significant role in shaping workplace practices.

An employment contract between an employee and employer is a legally binding agreement. An employee has the right to a “written statement of employment particulars” in accordance with Section 1 of the ERA1996. A Section 1 statement sets out the main terms of employment, and there is a list of mandatory terms that must be given to every employee.

An employer will be treated as having met its obligations to provide a Section 1 statement where it gives an employee a written contract containing information satisfying the employer’s Section 1 obligations, and the document is provided no later than the beginning of employment.

From October 2026, the ERA2025 introduces a new right to be provided with a statement of a worker’s right to join a trade union. This statement must be provided at the same time as the Section 1 statement.

The characteristics of a typical employment contract include:

• a job title and description;
• commencement date of the employment, duration and if it is intended to be for a fixed term;
• location of work;
• salary and benefits, including payment frequency;
• hours of work;
• probationary period and terms;
• notice period;
• holiday pay entitlement and procedures;
• sick leave policies and pay;
• notice period required for termination by either party;
• any training entitlement that the employer requires the worker to complete;
• disciplinary and grievance procedure;
• variation of terms – this explains how changes to the employment contract are made, typically requiring mutual agreement in writing; and
• any post-employment restrictions – non-compete or restrictive covenants.

In the UK, the regulation of working hours for workers (which includes employees) is governed by the Working Time Regulations 1998 (as amended). Key aspects of these regulations include the following.

• Maximum weekly working time: Workers are protected by a 48-hour maximum working week, calculated over a reference period (typically 17 weeks). Some sectors are exempt from this, as are senior workers, who can determine their own working time. Workers can opt out of the maximum working week by signing a written statement, but they cannot be forced to do so. They may opt back into the regime at any time by giving notice to their employer.
• Night work limits: For night workers, there are special limits on working hours. Typically, night work should not exceed an average of eight hours in any 24-hour period.
• Rest periods and breaks: Workers have the right to rest breaks during work (a minimum of 20 minutes if the working day is longer than six hours) and daily and weekly rest periods (11 consecutive hours’ rest in any 24-hour period and an uninterrupted 24 hours without any work each week or 48 hours each fortnight).
• Overtime regulation: Employers should decide whether overtime is voluntary or compulsory for a particular job and draft the employee’s employment contract accordingly. There are no statutory provisions that require an employer to pay a particular overtime wage, but average pay over the total hours they have worked must not fall below the national minimum wage. Working time may have an impact on employees’ holiday pay. Employers must ensure that total working time, including overtime, does not exceed the maximum weekly limit unless an opt-out agreement is in place.
• Record keeping: Employers must keep adequate records to show compliance with working time limits and health assessments for night workers.

The following conditions apply for termination of employment.

• There is no concept of “at will” employment in the UK, and employees have the right to be given notice when their employment terminates.
• As a requirement by law, employees must give their employer at least one week’s notice that they are leaving if they have been employed for one month or more. An employee who has been continuously employed for more than one month, but less than two years, is entitled to receive one week’s notice from their employer. Thereafter, they are entitled to receive an additional week’s notice for each complete year of service, up to a maximum of 12 weeks.
• If an employer wants to, it can extend the notice period beyond the statutory notice period by including longer notice periods in the employment contract.
• An employee can be dismissed without any notice period if they have committed a serious breach of the employment contract that would justify this (eg, gross misconduct).
• All employees with more than two years’ service may only be dismissed for one of the five legally fair reasons and be subject to a fair procedure. If the employer does not follow this procedure, the employee may have an entitlement to an ordinary unfair dismissal claim and can claim compensation as a result. The ERA2025 will reduce the qualifying period for unfair dismissal from two years to six months and completely remove the cap on compensatory awards. These changes apply from 1 January 2027.
• There are circumstances where employees with less than two years’ service can claim automatic unfair dismissal. These include if the dismissal is for a reason like pregnancy or other discriminatory reason. The ERA2025 will, from 1 January 2027, introduce a further category of automatic unfair dismissal where the reason for dismissal is the employer’s attempt to change certain core contractual terms (eg, a reduction in pay, changes to working hours or pension entitlements) and the employee refused to agree. This historically common practice by employers is known as “fire and rehire”. It should be noted that there is a limited exception where employers can demonstrate the change was necessary to address serious financial difficulties that could not reasonably have been avoided.

In the case of redundancies, the following process must be followed.

• If an employer proposes to make redundant 20 or more employees within a period of 90 days or less at one establishment (ie, the employees’ local workplace rather than the organisation as a whole), then it must consult collectively with elected employee representatives, as well as notify the Secretary of State. Consultation should start in good time before any redundancies are confirmed.
• Any dismissals should not take effect until at least:
1. 30 days after an employer’s consultation obligations have been triggered, where between 20 and 99 redundancies are proposed; or
2. 45 days after an employer’s consultation obligations have been triggered, where 100 or more redundancies are proposed.
• If an employee is made redundant and they have more than two years’ service, they will qualify for a statutory redundancy payment.

The following rules apply for collective consultation:

• an employer must collectively consult employees if they propose to make redundant 20 or more employees at one establishment within a period of 90 days or less;
• employers must consult with a trade union or employee representative about the redundancy process; and
• failure to comply with the legal requirement for collective consultation can result in claims to the employment tribunal. For dismissals taking place on or after 6 April 2026, the ERA2025 has doubled the maximum protective award for failure to comply with collective consultation obligations from up to 90 days’ gross pay to up to 180 days’ gross pay for each affected employee.

The following rules apply with respect to grievances and disciplinary hearings:

• employees and workers have a legal right to be accompanied, by a trade union representative or another employee, to grievance meetings or disciplinary hearings that can result in a disciplinary action against them;
• if an employee seeks the right to be accompanied, they must make a reasonable request;
• during a hearing, a representative may set out the employee’s case, respond for the employee to any comments, talk to the employee during the hearing or take notes; and
• denying an employee the right to be accompanied could amount to a breach of an implied duty of trust and confidence and render the process unfair.

Rules apply with respect to TUPE (Transfer of Undertakings (Protection of Employment)), as follows:

• prior to a TUPE transfer, both the outgoing and incoming employers must inform and consult with staff representatives to set out any proposed changes and why the transfer is taking place; and
• an employer will consult with an employee regarding any changes relating to work practices that will take place as part of the transfer.

Applicable ICE Regulations (Information and Consultation of Employees) are as follows:

• where an employer has 50 or more employees in the organisation, the employees have the right to request a formal agreement to be informed and consulted on the operation of the business; and
• an elected employee representative may assist in conducting negotiations and requesting information from the employer.

From October 2026, the ERA2025 will introduce the following reform of trade union laws:

• statutory right for unions to access workplaces physically to meet, support, represent, recruit or organise workers or facilitate collective bargaining, and to communicate with workers both in person and digitally;
• duty to inform workers of the right to join a trade union; and
• enhanced protections against detriment short of dismissal for union representatives and employees who take part in industrial action.

Employees are subject to income tax on earnings from their employment, which is charged at progressive rates of 20%, 40% and 45%. UK-resident individuals are generally taxable on their worldwide income; non-UK residents are taxed only on earnings in respect of duties performed in the UK, subject to any relief available under double tax treaties. Previously, individuals who became UK residents after at least three years of non-residence were entitled to claim “overseas workday relief”, whereby earnings from duties performed outside the UK were taxable only if and when remitted to the UK (the so-called “remittance basis of taxation”). From 6 April 2025, the remittance basis was replaced with the four-year foreign income and gains (FIG) regime. The regime allows qualifying residents to claim relief from taxes on eligible FIG and is available for a maximum period of four consecutive years from when an individual became a UK tax resident. Relief under the regime can be claimed only on the following types of foreign income:

• profits of a trade carried on wholly outside the UK;
• profits of an overseas property business;
• dividends from non-UK resident companies; and
• interest – eg, interest paid on a foreign bank account.

Employers with a presence in the UK are generally required to withhold tax from payments to employees, and to account for it to HM Revenue & Customs (HMRC) through the pay-as-you-earn (PAYE) system.

Special rules apply to tax benefits in kind and earnings from employment-related securities (including share options).

National insurance contributions (NIC; ie, social security contributions) are charged on employees who are present in the UK. These are currently charged at a rate of 8% up to the “upper earnings limit” (currently GBP967 per week) and 2% above that threshold. The employer is liable for secondary contributions at a rate of 15%. Employer contributions apply to benefits in kind, and both employer and employee contributions may apply to benefits from employment-related securities that are readily convertible assets. The employer is required to account for NIC through the PAYE system.

A company that is resident in the UK is chargeable to corporation tax on its worldwide profits. A non-resident company is chargeable to corporation tax on profits of a trade carried on in the UK through a permanent establishment therein, as well as from profits of a UK property business and any profits from a trade of dealing in or developing UK land. A residual charge to income tax applies to the profits of a trade carried on in the UK other than through a permanent establishment – in practice, this only applies to companies that are not resident in territories with which the UK has a tax treaty.

For accounting periods commencing on or after 31 December 2023, the UK has implemented the Pillar 2 Income Inclusion Rule, known as the multinational top-up tax (MTT), and a qualifying domestic top-up tax. The undertaxed profits rule was introduced with effect from 31 December 2024.

The UK imposes withholding tax on UK-source interest, royalties and certain other payments of a recurrent nature (“annual payments”) at a rate of 20%. There is no withholding tax on dividends, except dividends paid by companies within the real estate investment trust regime. Withholding tax liabilities may be reduced or eliminated under the UK’s double tax treaties, and certain additional reliefs apply under domestic law with respect to withholding tax on interest.

Companies with a UK establishment are obliged to register for VAT and to charge VAT on taxable supplies of goods and services if the value of its taxable supplies exceeds the VAT registration threshold (currently GBP90,000). Non-established persons are liable to register if they make any taxable supplies in the UK.

The UK offers an “above the line” credit for expenditure on research and development, which was subject to significant reform with effect from 1 April 2024. The amount of the credit is 20% of the qualifying expenditure, which is itself subject to corporation tax in the hands of the recipient, subject to a cap in many cases at three times the amount of the company’s PAYE and NIC liabilities for the accounting period plus GBP20,000.

The former super-deduction regime for SMEs has been retained for loss-making, R&D-intensive SMEs. This provides an enhanced 186% deduction for qualifying R&D expenditure, which may be surrendered in exchange for a repayable tax credit amounting to 14.5% of the surrenderable loss. Similar reliefs are available for companies in the creative sector.

An elective patent box regime applies for profits from qualifying patents, resulting in an effective tax rate of 10% on qualifying profits.

The UK does not have a consolidation regime for corporation tax purposes. However, the group relief rules allow companies to surrender losses within a group. Broadly, companies are members of the same group for this purpose if one is a 75% subsidiary of the other, or both are 75% subsidiaries of a third company (which need not be a UK company). Both current and carried-forward losses arising on or after 1 April 2017 may be subject to group relief surrenders.

The transfer of capital assets (including intangible fixed assets and loan relationships) between group companies will generally be viewed for tax purposes as taking place on a no-gain/no-loss basis, although the gain that would otherwise have been taxable on the intra-group transfer may be brought back into charge by way of a “degrouping charge” if the transferee company leaves the group within the next six years. A company that disposes of an asset outside the group may elect for the gain to be reallocated to another group company (eg, a company that has losses it can use to offset the gain).

For VAT purposes, companies may elect to register as a group where one controls the other or the two companies are under common control (including control by an individual or partnership). The effect of group registration is that all supplies to third parties are treated for VAT purposes as made by the representative member of the group, all supplies between group members are disregarded, and all group members are jointly and severally liable for the group’s VAT liabilities.

The UK polices thin capitalisation through transfer-pricing legislation. Interest expense exceeding an arm’s length amount may be disallowed for tax purposes. The transfer pricing legislation provides that it should be read in line with the 2022 OECD Transfer Pricing Guidelines, which include the guidance on financial transactions approved in 2020. The capacity of companies within a group to bear interest expense is generally tested on a company-by-company basis, but, to the extent that a debtor company is unable to do so, other group companies can be treated as guarantors and, as such, may take interest deductions for such interest expense. HMRC will consider entering into advance thin-capitalisation agreements to provide certainty as to a company’s interest deductibility position – these have statutory force as advance pricing agreements.

In addition, the UK has introduced a corporate interest restriction limiting interest deductions for UK group companies to the lower of 30% of tax EBITDA and the worldwide group’s interest expense, subject to a GBP2 million de minimis. Where the worldwide group has an interest – ie, an EBITDA ratio that is higher than 30% – the UK companies may make a “group ratio election”, allowing it to claim interest deductions up to an equivalent ratio. Disallowed deductions may be carried forward indefinitely and utilised in future periods; unused allowances with respect to the interest:EBITDA ratio may be carried forward for up to five years, and unused allowances with respect to the worldwide interest expense may be carried forward for one year.

The UK has transfer pricing rules that align with – and are to be interpreted in accordance with – the OECD transfer pricing guidelines. These apply to domestic UK-to-UK arrangements, as well as cross-border provisions, but the government has recently consulted on introducing an exemption for transactions between UK companies where no UK tax is at stake.

An exemption applies where the UK company is dormant. In addition, SMEs are exempt from transfer pricing rules with respect to transactions with residents of the UK and of territories with which the UK has a full tax treaty. HMRC may issue a transfer pricing notice to “turn on” the transfer pricing rules to a medium-sized enterprise in any circumstances, or to a small enterprise where a transaction results in profits benefiting from the patent box regime.

From 1 January 2026, the Finance Act 2026 introduced various reforms to the UK’s transfer pricing, permanent establishment and diverted profits tax (DPT) rules, including an exemption from transfer pricing rules for domestic transactions between UK companies taxable at the same corporation tax rate and an improvement to the “acting together” rules, to prevent truly arms-length arrangements from being caught by the rules. The government considered bringing medium-sized enterprises fully within the ambit of transfer pricing, but decided not to proceed with this proposal.

The UK has numerous anti-avoidance rules, many of which operate to disregard or re-characterise arrangements whose main purpose, or one of whose main purposes, is the obtaining of a tax advantage. These include a general anti-abuse rule, which can counteract arrangements giving rise to a tax advantage where they are “abusive” – defined as arrangements that cannot reasonably be regarded as a reasonable course of action in relation to the relevant legislative provisions. The courts have established that legislation must be read purposively and applied to the facts as viewed realistically – principles that have frequently been applied to counteract perceived avoidance.

Since the end of the Brexit transition period on 31 December 2020, the tariff regime in the UK has been governed by the UK Global Tariff (UKGT). The UKGT applies to all countries and all goods imported into the UK, unless the UK has a free trade agreement (FTA) with the country of origin or an exception applies (eg, the goods are imported from certain developing countries). Broadly, the tariff rates under the UKGT follow the EU tariffs, with some exceptions for goods where the UK has no domestic production.

Examples of notable FTAs include:

• the Trade and Cooperation Agreement with the EU – this came into force on 1 May 2021 and removed tariffs from goods traded between the UK and the EU, provided that traders had “self-certified” their compliance with agreed rules of origin (ie, that the goods have originated in either the UK or the EU according to specific criteria); and
• the Comprehensive and Progressive Agreement for Trans-Pacific Partnership between the UK and nine countries in the Asia-Pacific region – this allows for tariff elimination and reduction on key sectors (eg, food and agricultural products and goods in digital trade).

Some goods are covered by a tariff-rate quota (TRQ), which allows a limited amount of a product to be imported at a lower or zero tariff rate, subject to certain qualifying criteria. TRQs primarily cover agricultural and fishery products, as well as processed foods and industrial goods.

The UK has removed Russia’s Most Favoured Nation status, following its invasion of Ukraine, effectively imposing significantly higher tariffs on Russian goods. Additional duties of 35% are currently imposed on a wide range of goods originating from Russia and Belarus, above any existing tariff rates.

On 24 April 2025, the UK introduced new restrictions, including a complete prohibition on the importation of Russian diamonds and prohibitions on the export to Russia of energy-related goods and security technology. In previous years, various other sanctions had been implemented to introduce restrictions on trade for goods (eg, oil, gold, iron and steel products), which continue to be in force.

The recent trade deal with the USA has led to various tariff adjustments. Under the deal, the USA will continue to impose a new 10% tariff on imports for most British goods but higher tariffs on the imports of British cars, steel and aluminium will be reduced.

The UK’s merger control regime is overseen by the Competition and Markets Authority (CMA), which will have jurisdiction to review a transaction where a relevant merger situation has been created. This will be the case where two or more enterprises cease to be distinct and either:

• the target has turnover in the UK of exceeding GBP100M (the “turnover test”); or
• at least one of the parties has a UK turnover of more than GBP10 and, as a result of the transaction, the parties have a combined share in excess of 25% of the supply of any goods and services in the UK or a substantial part of it (the “share of supply test”).

There is also a "hybrid" test, where the CMA will have jurisdiction where one party to the transaction (usually the acquirer) has an existing UK annual turnover of GBP350 million or more and supplies or acquires at least 33% of a particular category of goods or services in the UK (or a substantial part of it). The other party must be connected to the UK.

The UK has a largely voluntary notification system, so even where any of the thresholds are met, the parties are not required to seek clearance before completion of the transaction. For entities that the CMA has designated as having strategic market status under the Digital Markets, Competition and Consumers Act 2024, there is a mandatory requirement to notify to the CMA M&A activity above GBP25 million.

The rules are triggered when enterprises cease to be distinct – ie, brought under common ownership or control. This covers any joint venture or acquisition of shares that give total or partial control over any other entity.

The parties will need to determine whether to notify to the CMA for clearance. If they choose to do so, the following steps must take place.

• The CMA must be informed of the transaction, and pre-notification discussions on a draft merger notice are entered into, which can last up to three months (longer in complex cases).
• The CMA must be provided with the draft, and any additional queries from the CMA must be responded to.
• When the CMA is satisfied that the draft notification is complete, the parties must make the transaction public and formally file the merger form, and the CMA will start the formal Phase 1 process.
• Phase 1 will take up to 40 working days, and the CMA will consider whether the transaction may lead to a “substantial lessening of competition” (SLC).
• If there are no competition concerns, the CMA will proceed to clearance and issue a decision, which will be publicly announced.
• If it is determined that there is the risk of an SLC, the CMA has a duty to refer to a more in-depth Phase 1 review.
• To avoid a Phase 2, it is open to the parties to offer remedies to address competition concerns, in the form of binding undertakings in lieu of reference (UIL).
• Generally, the CMA will accept UILs where the problem is easily severable (structural remedies – ie, divestment of all or part of the business). Behavioural remedies may also be considered.
• If UILs are offered, the CMA will begin the process of a detailed consideration of whether they are suitable. The timeframe for final determination is 50 working days from when the SLC decision was announced to the parties, with the possibility of a 40 working-day extension.
• If the CMA refers to Phase 2, a more in-depth and detailed examination of the possible SLC that was identified in Phase I is undertaken. The entire process is complex and time-consuming, and the CMA has up to 24 weeks from reference (extendable by up to eight weeks) to make a final decision.

If the parties choose not to notify for clearance, the CMA has up to four months from the later of completion of a non-notified merger and the time when the transaction became public to investigate. While considering whether to investigate an anticipated completed transaction, the CMA may make an initial enforcement order to prevent pre-emptive integration of the businesses or require the reversal of any action. This means that the parties are unable to begin to integrate the businesses until the CMA’s investigation is complete (and clearance obtained) or the CMA confirms that it does not have jurisdiction.

If the CMA decides to look into a non-notified transaction, it will send the acquirer an enquiry letter requiring it to respond with details of whether one or both the jurisdictional thresholds are met and, if so, further substantial details relating to the transaction. If the thresholds are met, the CMA may decide to open a merger investigation and begin the process as set out in the foregoing.

If the parties believe that the transaction does not raise competition issues, or they take a decision not to notify formally, they can submit what is called a “briefing paper”. This is a well-reasoned document of around 5–6 pages explaining why the parties do not propose to submit a notification to the CMA and why there are no competition issues.

If the CMA agrees with the parties’ assessment, it will usually come back stating that it has no further questions. This is not public, and third parties are not contacted in relation to a briefing paper. A briefing paper can usually only be submitted after the transaction documentation is signed, and the CMA usually gives a response within a couple of weeks. There are no filing fees.

If the response is positive, and the CMA does not call in the transaction for a Phase 1 review, this gives some comfort to the parties, although the CMA reserves the right to open a Phase 1 investigation at a later stage – eg, if new facts come to light or complaints are raised. As mentioned in the foregoing, the CMA can open an investigation, even after a briefing paper, within four months of the deal being made public.

Chapter 1 of the Competition Act 1998 prohibits agreements between undertakings, decisions by associations of undertakings, and concerted practices that may affect trade within the UK and have as their object or effect the prevention, restriction or distortion of competition. All agreements that infringe Chapter 1 are void.

Section 2(2) of the Act sets out a non-exhaustive list of prohibited behaviour, comprising the following:

• directly or indirectly fixing purchase or selling prices or any other trading conditions;
• limiting or controlling production, markets, technical development or investment;
• sharing markets or sources of supply;
• applying dissimilar conditions to equivalent transactions with other trading parties, placing them at a competitive disadvantage; and
• making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations that, by their nature or according to commercial usage, have no connection with the subject of such contracts.

Certain agreements may be exempt from the prohibition if they contribute to improving production or distribution, or promoting technical or economic progress, while allowing consumers a fair share of the resulting benefits. However, these agreements must not:

• impose restrictions that are not indispensable to the attainment of these objectives; or
• afford the undertakings concerned the possibility of eliminating competition in respect of a substantial part of the products in question.

If an agreement is investigated, the CMA can impose fines on undertakings that violate the prohibition of up to a maximum of 10% of their worldwide turnover.

Chapter 2 of the Competition Act 1998 prohibits any conduct by one or more undertakings that amounts to the abuse of a dominant position in a market within the UK, and partially prohibits it if it may affect trade within the UK.

An undertaking is considered dominant if it can act independently of competitive pressures (eg, setting prices, controlling supply or hindering competitors’ ability to operate in the market). There is a rebuttable presumption of dominance if an undertaking has a share of the relevant market of more than 50%, and CMA guidance confirms that less than a 40% share is unlikely to create dominance.

Section 18(2) of the Act sets out examples of abuse, including the following:

• directly or indirectly imposing unfair purchase or selling prices, or other unfair trading conditions;
• limiting production, markets or technical development to the prejudice of consumers;
• applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; and
• making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations that, by their nature or according to commercial usage, have no connection with the subject of such contracts.

If it can be shown that the behaviour is objectively justified, it will not be abusive even if competition is restricted. It is for the dominant undertaking to prove the justification. If conduct is investigated, the CMA can impose fines on dominant undertakings of up to 10% of their worldwide turnover.

Patents are exclusivity rights that protect products and processes of a technical nature. The subject matter of protection must be novel and inventive, and must satisfy several other statutory requirements, for the patent to be valid. Patents last 20 years, but protection may be extended in the case of a medicinal product by up to a further five years by a supplementary protection certificate. Patents are normally registered in national patent offices once granted, but the unitary patent (which has pan-European protection for 18 countries rather than a single country) is registered at the European Patent Office. Depending on the nature of the patent, it may be enforced in infringement proceedings in the national courts or the Unified Patent Court. Remedies for infringement typically include damages and injunction.

Broadly, a trade mark is any sign capable of distinguishing the goods and services of one undertaking from those of others. A trade mark can consist of, for example, words (including personal, business and brand names), logos, patterns, letters, numerals, colours, sounds, motions, holograms, videos and the shape of goods or their packaging. Provided they are not cancelled, trade mark registrations subsist for ten years from the date of registration and can be renewed (potentially indefinitely) for successive periods of ten years on payment of a fee. No proof of use is required for renewal. Trade mark protection can be obtained by filing an application with (i) the UK IP Office or (ii) the World Intellectual Property Organization (WIPO) for an international mark designating the UK. The latter can be cheaper and administratively easier if applications for the same mark are being filed in numerous jurisdictions. Trade marks must be registered for specific goods and/or services.

Protection for one good/service will not necessarily mean that the owner can prevent third-party use of the same mark for other goods/services. Unlike some other jurisdictions, a trade mark does not need to have been used for an application to be filed. However, once registered, if a mark is not put to genuine use for a continuous period of five years in the UK, it can be revoked on application of a third party (subject to various conditions).

Applications are examined to determine whether they meet the definition of a registrable trade mark. Following successful examination, applications are published to allow oppositions to be filed by any third parties who consider they have a conflicting prior right. The UK IP Office will not raise an objection on these grounds of its own volition. Assuming any objections and oppositions are successfully resolved, an application will be registered (usually within about five months). Now that the UK is no longer part of the EU, EU trade marks (EUTMs) no longer cover the UK. However, the UK legislated to fill the gap by creating a new UK mark (called a “comparable trade mark”) for all EUTMs in existence as of 31 December 2020.

The UK law of passing off protects the goodwill generated through using a trade mark (whether that mark is registered or not). It can also be used to prevent false endorsements and some misleading claims of equivalence.

Trade mark and passing-off rights are enforced through the UK courts. Remedies for infringement include compensation, an injunction to restrain the infringement, delivery up/destruction of infringing materials, publication of the judgment and legal costs. Interim injunctions can also be obtained.

Brand owners are strongly advised to (i) conduct clearance searches before launching new brands in the UK to check that they will not be infringing anyone else’s rights, and (ii) file trade mark applications before announcing/launching new brands. This could save the considerable costs and embarrassment of having to re-brand.

There are two main types of design protection available in the UK: a registered design and an unregistered design. Both protect the appearance of a product or its packaging, resulting from their features (including features resulting from the lines, contours, colours, shape, texture and/or materials of the product/packaging). Surface decoration is also protected. To be protected, a design must be new and have individual character, and not be dictated by the technical function of the product.

A design registration lasts for a maximum of 25 years and must be renewed every five years (on payment of a fee). Unregistered design protection subsists for three years from first disclosure. Registered protection is much stronger (in particular, unregistered designs are only infringed when copied). If registration is required, an application must be filed within 12 months of first disclosure of the design; otherwise, the design will be deemed not new.

Registered protection can be obtained by filing an application with (i) the UK IP Office or (ii) WIPO for an international design designating the UK. The latter can be cheaper and administratively easier if applications for the same design(s) are being filed in numerous jurisdictions. There is very little examination of design applications, and no opposition procedure. Multiple designs can be filed in the same application to save costs.

Since the UK is no longer part of the EU, pan-EU Registered and Unregistered EU Designs no longer cover the UK. However, any such designs in existence on 31 December 2020 continue to be protected in the UK for the life of the right.

Designs are enforced through the courts in the UK. Remedies for infringement include compensation, an injunction to restrain the infringement, delivery up/destruction of infringing materials, publication of the judgment and legal costs. Interim injunctions can also be obtained.

The UK also protects another form of unregistered design (called a “design right”). It is similar in scope to the unregistered design, although there are key differences – eg, a design right does not protect surface decoration.

Copyright protects original literary, dramatic, musical and artistic works, as well as other subject matter (including sound recordings, films and broadcasts). It therefore protects original drawings, graphics, software code, literature and databases. Copyright generally lasts for the life of the author plus 70 years. Different rules apply to computer-generated works, films, sound recordings, broadcasts and non-UK works/authors. It is not possible to register copyright in the UK. Protection arises automatically once a work is recorded, in writing or otherwise (irrespective of whether it is recorded by or with the permission of the author).

The general rule is that the author of a literary, dramatic, musical or artistic work is automatically the first owner of copyright in it. However, where such a work is made by an employee in the course of their employment, their employer is the first owner of copyright. Ensuring that any works created by independent contractors, outside consultants and design agencies are automatically transferred to a business is key.

Copyright is enforced through the UK courts. Remedies for infringement include compensation, an injunction to restrain the infringement, delivery up/destruction of infringing materials, publication of the judgment and legal costs. Interim injunctions can also be obtained.

Copyright can be infringed in a number of ways, including by copying the whole or a substantial part of a work in which copyright subsists (with a substantial part being assessed qualitatively rather than quantitatively). Using even very small parts of a work can constitute infringement, but there are some “permitted uses”.

Copyright can subsist in original software text/code. Databases are protected under the law of copyright if they are original – ie, if, by means of the selection or arrangement of the contents of the database, the database constitutes “the author’s own intellectual creation”.

A separate right, called the database right, also protects databases for which there has been a “substantial investment” in “obtaining, verifying or presenting the contents of the database”. Unlike copyright, there is no requirement for originality/creativity. “Investment” can mean “any investment whether in financial, human or technical resources”. Like copyright, the database right is an automatic right that exists as soon as the database is fixed in recorded form.

Trade secrets protect certain commercially sensitive and confidential information, including industrial processes and recipes, against disclosure to or use by third parties without consent. These may be enforced against breach resulting in damages and injunction.

The UK General Data Protection Regulation (UK GDPR) is the main legislation governing the processing of personal data. It is retained in EU law and largely mirrors the EU General Data Protection Regulation 2016 but has recently been amended by the Data (Use and Access) Act 2025 (D(UA)A), which renders the UK legislation slightly further apart from the EU’s General Data Protection Regulation, although the two laws remain fundamentally similar. The UK GDPR places a range of obligations on those processing personal data and confers rights on individuals in relation to their personal data. The DPA 2018 supplements the UK GDPR (including where the UK was given discretion as to its implementation). It also implements the EU Law Enforcement Directive and covers the processing of personal data by the UK intelligence services. The Privacy and Electronic Communications Regulations 2003 as amended (PECR), based on the EU’s ePrivacy Directive, set out additional rules governing the privacy of communications. In particular, they cover direct marketing and the use of cookies and similar technologies.

The Network and Information Systems Regulations 2018 (the “NIS Regulations”) implement the EU’s Network and Information Security (NIS) Directive 2016. They cover the security of IT systems and impose various cybersecurity and incident reporting obligations on relevant digital service providers and operators of essential services in designated sectors.

The Product Security and Telecommunications Infrastructure Act 2022 deals with the security of consumer-related products. Together with related secondary legislation, it imposes security requirements throughout the supply chain.

A variety of other sector-specific cybersecurity laws may be relevant, and the D(UA)A also introduces new provisions relating to the sharing of personal and non-personal data, the detail of which will be brought in under secondary legislation.

Most of these laws have extraterritorial effect, applying to businesses operating in the UK, targeting or supplying the UK, or processing the personal data of UK individuals, regardless of the organisation’s location. The UK GDPR applies to any organisation processing the personal data of UK individuals where the processing relates to offering them goods or services, or to monitoring their behaviour. It applies to the processing of personal data by a controller or processor in the context of an establishment located in the UK, regardless of where the processing takes place. There are strict rules around the export of personal data from the UK.

The Information Commission (IC) is the agency in charge of enforcing data protection and cybersecurity rules, and it also produces guidance and codes of practice (notably the Children’s Code, which covers the processing of children’s personal data by online services). The IC has various powers. Under the UK GDPR, for example, it has a range of enforcement powers, including to impose fines for non-compliance of up to the higher of GBP17.5 million or 4% of annual global turnover. Data controllers are required to pay annual fees to the IC of between GBP52 and GBP3,763 depending on their size and subject to minor exceptions.

The UK commenced a review of its design laws in 2025. This follows amendments to the EU design regime. The UK is expected to pass the Cyber Security and Resilience (Network and Information Systems) Bill in 2026. This will expand and update the scope of the current NIS Regulations largely (but not wholly) in line with the EU NIS2 Directive, which was enacted after Brexit. The government plans to legislate on AI, although this is expected to cover AI infrastructure rather than AI safety.

New restrictions on filing documents at Companies House are expected to take effect no earlier than November 2026. Only directors or employees of a company who have verified their identity at Companies House will be able to file on behalf of that company, other than authorised intermediaries who are registered with Companies House. Identity verification requirements for corporate directors, relevant legal entities with control and corporate members of LLPs, as well as new restrictions on the use of corporate directors, are expected to take effect at a similar time.

The UK government consulted on proposed amendments to the NSIA notification regime in 2025 and published its response in March 2026. The proposed changes will refine the scope of mandatory filings by introducing new sensitive sectors (including water, critical minerals and a standalone semiconductors category) while narrowing certain definitions, particularly in relation to AI, to focus the regime more closely on transactions that present genuine national security risks. The reforms are expected to be implemented later in 2026; until then, the existing NSIA rules remain in force.