Budget 2021: Changes for large companies

Published by Laurence Parry on 27 October 2021

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Rishi Sunak’s Budget announced a number of changes for large companies.

Cross border group relief

As part of EU anti-discrimination rules, the UK was required to allow a tax deduction for losses incurred by group companies resident in another EU state. For policy reasons, this was actually extended to include EEA states. Following Brexit, the Government has taken the opportunity to repeal this provision. In practice, this is more a theoretical issue than a practical one as the rules were very restrictive. The (lack of) impact is that it is estimated to cost companies £5 million per annum in total.


As part of the OECD’s Base Erosion and Profit Shifting programme to reduce abusive tax arrangements, the UK introduced rules to limit the UK tax benefits where there was no corresponding tax charge overseas. The issue was particularly relevant to US-owned businesses in the UK as under US law, they were allowed to treat UK companies as a branch. Under the strict terms of the law this meant that the UK company would not get a tax deduction for payments to the US businesses even where these were wholly commercial. The Government has confirmed that this will be changed.

Disclosure of uncertain tax position

The Government has confirmed that large businesses will have to notify HMRC where they have made a provision for tax where the position is uncertain. Key here is the definitions; large is any business with gross assets over £2bn, or turnover over £200m (so businesses that would be within the Senior Accounting Officer Regime) and where the provision is over £5m. It will be interesting to see the definition as to whether the £5m relates to a particular issue but covering a multitude of taxes (in theory, it could relate to a VAT, NIC and Corporation Tax), or whether it is by tax heading only.

Recovery Loan Scheme

The Recovery Loan Scheme (RLS) has been extended and will now only cover small and medium sized businesses from 1 January 2022. The RLS is no longer a “one-size fits all” funding solution.

Join our Budget question time – Connecting the dots webinar on Friday 29 October, where our panel of tax and finance experts will be on hand to answer your Budget related questions.

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