UK Legal Update - Spring 2025

The EU AI Act applies to entities established outside the EU, as well as to those within the EU, if
they put AI systems on the market or into service in the EU or the output of the AI system is used
in the EU. Both the AI literacy requirement (an obligation to educate and train staff interacting
with AI) and the ban outlawing unacceptable systems under the EU AI Act are now in force for in-scope organisations, effective from 2 February 2025. Read our briefing for full details of what and who are in scope.

The extensive obligations on new high-risk systems and transparency requirements do not apply
until 2 August 2026 but we are advising our UK business clients to start preparing now to meet these requirements.

There is still no UK AI Bill. Given the current geopolitical climate (see The Trump effect on tech regulation below), the Bill looks likely to be delayed until the summer and - if it emerges at all - we can expect it to focus on the largest general-purpose AI models.

At the start of the year, the UK Government announced a new drive in its AI Opportunities Action Plan to accelerate the UK’s AI development economy and to promote broader and more rapid AI adoption by the UK's public and private sectors.

While we may not see specific AI legislation in the UK for some time, there is nevertheless a steady flow of AI guidance emerging from UK regulators to help organisations develop and use the technology in compliance with existing laws. For example, from a data protection law perspective, in recent months the Information Commissioner's Office published its response following an extensive consultation on generative AI models, specific guidance on AI's use in recruitment, and its views in response to the Government's consultation on data scraping.

The Data (Use and Access) Bill (DUAB) is currently making its way through the UK Parliament. It sets out limited data protection reforms, scaling back on some of the reforms from the previous government's Data Protection and Digital Information Bill. It is likely to require few changes to data protection compliance on the ground but introduces greater flexibility to rules around automated decision-making to support AI adoption and innovation. It also aligns the penalties under the Privacy and Electronic Communications Regulations (marketing and cookie laws) with those under the GDPR. Our briefing describes the key changes for the UK from a data protection perspective.

The EU's adequacy decisions in favour of the UK, which allow the free flow of personal data from the EU to the UK, were due to expire on 27 June 2025. The EU Commission has proposed to extend the effect of the decisions until 27 December 2025 to allow the UK time to finalise the UK Data (Use and Access) Bill.

For businesses within the scope of the UK Online Safety Act (OSA), achieving compliance and swiftly adapting to extensive new guidance is a significant challenge. The OSA extends beyond UK-based services. It applies to any online service with "links to the UK". If a service targets the UK market, such as marketing to, or generating revenue from UK users, or has a significant number (which is not defined) of UK users, it falls within the OSA’s reach.  Moreover, if there is a material risk of significant harm to UK individuals, the OSA applies.

Compliance deadlines are coming thick and fast – in-scope organisations had until 16 March 2025 to complete their initial illegal harms risk assessment and begin implementing illegal content safety duties and they have until 16 April 2025 to complete their child access assessment. The summer will usher in further key milestones. Our briefing looks at the OSA’s scope, its phased rollout, key duties for providers, enforcement measures and the broader geopolitical backdrop.

Earlier this year, the UK Government launched a consultation on three measures, which aim to undermine the ransomware business model – making UK businesses less profitable for cybercriminals to target - and improve the UK Government's intelligence around ransomware threats. The proposals are:

1. a targeted ban on ransomware payments, covering public sector bodies and owners/operators of critical national infrastructure (although the consultation asks if the ban should cover essential suppliers to those sectors too);
2. a payment prevention regime which requires ransomware victims to report their intention to pay a ransom to enable to the UK Government to prohibit certain payments; and
3. a mandatory incident reporting regime.

Our briefing describes the UK proposals and their implications in more detail.

Yet to appear, but promised for 2025, the UK Cyber Security and Resilience Bill is due to reform the Network Information Security Regulations 2018 (NISRs) and extend cyber defence rules to more essential digital services and supply chains.

The emphasis deregulation under the Trump administration and the threat of tariffs has undoubtedly impacted tech regulation on this side of the Atlantic too.

• AI: At the AI Action Summit in Paris in February 2025, the US and the UK refused to sign the AI Declaration on “inclusive and sustainable” AI. Whilst the US Vice President, JD Vance, decried Europe's "excessive regulation" of AI, the UK representative referred to a lack of clarity on global governance and national security issues. In the wake of the summit, the EU also withdrew the AI Liability Directive from its 2025 work programme. The delay to the UK's AI Bill has also been attributed to the impact of US policy moves.
  
  
• Data transfers: There is some concern that the future actions of the Trump administration could undermine the EU Data Privacy Framework (DPF). The UK has implemented a similar framework for UK to US transfers, which capitalises on the DPF. The concern stems from certain measures that are perceived to chip away at the independence of oversight bodies. No steps have been taken so far which are likely to be sufficiently fundamental to cause the invalidation of the DPF and it is in the US' commercial interests too that the DPF is preserved.
  
  
• Big Tech: Days into the Trump administration, major US social media companies watered down or abandoned their content moderation systems dealing with harmful material. Back in February 2025, the White House threatened to impose tariffs on European countries that had implemented a digital services tax and mentioned, as potentially also giving rise to retaliatory measures, “regulations imposed on United States companies by foreign governments that could inhibit the growth or intended operation of United States companies”. The most recent suspension of tariffs by the US may be designed to trigger a fresh round of trade negotiations but  the latest announcement from the UK Government (8 April 2025) suggests that it would not make  amendments to UK online safety laws in return for a favourable deal on tariffs.

The UK's Court of Appeal's decision in Thatcher v Aldi is welcome news for owners of brands with a strong reputation, who have had the foresight to register their packaging and labelling designs as trade marks, combatting lookalike products. Aldi's sign for its TAURUS lemon cider was found to have taken unfair advantage of, and therefore infringe, Thatchers' registered trade mark in respect of the designs for its lemon cider cans and packaging. The UK court was presented with persuasive evidence that Aldi achieved substantial sales despite not having spent anything on marketing, and that Aldi deliberately benchmarked against Thatchers' products. This is another example of the UK courts reining in lookalikes - in 2024, Tesco was forced to rebrand its Clubcard after losing in the UK Court of Appeal to Lidl in respect of the well-known yellow circle in a blue square design. Tesco was found (amongst other things) to have taken unfair advantage of Lidl's trade mark to convey an erroneous price matching message.

Limited progress has been made in upgrading the UK-EU trading relationship – and it's likely that talks will not begin in earnest until the parties have reached agreement on a defence pact. That said, the reluctance of the US to continue support for Ukraine is likely to give any security pact renewed urgency – and it may be that the new US administration's aggressive stance on trade provides fresh impetus for the UK and EU to seek to improve upon the existing Trade and Cooperation Agreement. At the time of writing, however, incremental improvements to that agreement seem the most likely outcome – which is unlikely to be a game-changer in terms of the UK's economic performance.

In late 2024, the UK Government announced its intention to "crack down on late payments" and outlined several measures intended to support this. It proposes to step up enforcement of the late payment disclosure regime for larger businesses and to consult on further changes designed to promote additional transparency and scrutiny. Alongside this, a revised voluntary code has been published together with a more demanding prompt payment standard for many suppliers to the public sector. One key takeaway is that late payment is increasingly being seen as an ESG issue – and businesses that fail to take it seriously face an increasing risk of significant reputational damage. See our briefing for more detail.

In February 2025, the UK Court of Appeal ruled that the UK High Court was correct to find that mobile provider EE was not entitled to claim damages for loss of anticipated profits arising from alleged breach of exclusivity in relation to its supply agreement with Virgin Mobile.

For more detail, see our briefing.

Our 5 -minute video primer on key pricing issues in UK commercial contracts covers:

• whether suppliers can raise prices unilaterally;
• how to deal with inflation;
• cost plus and open book pricing;
• audit clauses;
• "best price" or MFN obligations;
• price-matching clauses; and
• benchmarking.

A claim against a UK mobile telecoms provider by its current and former franchisees alleges that the franchisor acted in bad faith. Our briefing looks at:

• previous UK franchise cases involving good faith;
• the role of good faith in cases involving exercise of a contractual discretion by one of the parties (usually the franchisor); and
• whether UK franchise agreements contain a general obligation of good faith.

As part of its attempt to reduce the amount of EU-derived law in the UK, the previous UK government launched a consultation on whether to repeal the Commercial Agents Regulations. Among other things, these Regulations enable certain sales agents to claim substantial sums from the business that they act for when the agency ends (in recognition of the goodwill they have built up on behalf of those businesses). The current UK Government has now confirmed that these Regulations will be retained. This removes the uncertainty created by the consultation – which may have prompted some businesses to postpone decisions to appoint new agents, pending the Government's response. More generally, this is a further example of how – despite the UK having the freedom to diverge from EU law following Brexit – it often ended up choosing not to do so.

The Regulations only apply to sales agents for goods, not services – although this CJEU case from 2021 confirms that software supplied on a perpetual licence basis is also covered by the Regulations. However, in a more recent case, the English High Court concluded that software as a service (SaaS) did not amount to goods for the purposes of the Regulations.

FTPF Offence

As previously reported, the Economic Crime and Corporate Transparency Act 2023 (ECCTA) introduced a new failure to prevent fraud offence in the UK (FTPF Offence), intended to hold large organisations to account for fraud committed by their associates. The FTPF Offence will come into force on 1 September 2025. 

Under the FTPF Offence, organisations will be liable where a fraud offence is committed by an employee or agent, for the organisation's benefit, and the organisation did not have reasonable fraud prevention procedures in place.

The FTPF Offence does not only apply to UK businesses but has extraterritoriality (i.e. applies outside of the UK) and applies wherever an associated person of a large organisation (wherever incorporated) commits a Base Fraud Offence which is triable under UK law.

• For example, if a UK-based employee of a large organisation incorporated overseas, commits a Base Fraud Offence (e.g. by committing relevant acts while on UK territory) – then that large organisation could still be prosecuted for an FTPF Offence.
• Equally, if an associated person of a UK business commits a Base Fraud Offence outside of the UK, but there is a UK nexus (e.g. targeting UK victims) – then that organisation can also be prosecuted. 

New guidance outlines what organisations can do to help prevent fraud and avail themselves of a defence to the FTPF Offence. For more, read our briefing Failure to prevent fraud guidance published – what do businesses need to do now?

ACSP Registration and IDV

A key element of ECCTA is the implementation of a new identity verification (IDV) regime for individuals associated with UK companies and LLPs, including those based overseas. Individuals can complete IDV themselves directly with the UK's register of companies, Companies House, or through an authorised corporate service provider (ACSP) that has been registered and approved by Companies House.

Companies House has launched its ACSP registration service and individuals can voluntarily verify their identity from 8 April 2025. As of now, Companies House is still working towards mandatory IDV measures coming into force from Autumn 2025 for all new directors, PSCs of UK companies, and all new members of UK LLPs upon incorporation. A 12-month transitionary period will commence at the same time for existing directors, PSCs, and LLP members to complete their IDV or risk facing penalties including fines and prohibitions on acting as a director.

For further information on IDV, see our briefing: Economic Crime and Corporate Transparency Act 2023: What to Expect from the New Identity Verification Regime

The Walker Guidelines on Disclosure and Transparency in Private Equity require UK portfolio companies to make certain disclosures in the annual financial reports. The Guidelines also require private equity firms, including those headquartered overseas, holding UK portfolio companies, to make certain disclosures. The Guidelines were introduced in 2007 to address concerns about transparency in the private equity market. Compliance is voluntary but required for BVCA members.

Last autumn, we reported that the Private Equity Reporting Group (PERG) and the British Private Equity & Venture Capital Association (BVCA) had initiated a consultation to update the Walker Guidelines.The revised Walker Guidelines were published by the BVCA late last year and take effect for financial years that end after April 2025. The main changes include redefining which private equity firms and transactions will fall within the scope of the Walker Guidelines and revised UK reporting requirements for in-scope portfolio companies in three main areas: principal risks and uncertainties; environmental matters; and diversity, equity and inclusion (DEI). For further information on the revised Walker Guidelines, please see our briefing note: Revised Walker Guidelines published.

In the UK, board minutes serve as a legal record of what occurs at a UK company’s board meeting, from what was discussed to what decisions, or resolutions, were made. They are important legal documents and are subject to statutory requirements. Board minutes are usually taken by the company secretary and approved by the company's directors. However, with the rapid advance of AI and the proliferation of AI note takers in the market, we are increasingly advising UK clients on how to deal with digital transcription of company meetings.

The results from a recent poll on the use of AI in minute-taking by listed and large UK private companies highlight mixed views on the use of AI in the boardroom. Instigated by the GC100 (the association of general counsel and company secretaries working in the FTSE 100, the UK's 100 biggest companies on the London Stock Exchange), the poll analysis highlights a number of key issues and practice points for companies to consider when looking at the use of artificial intelligence in minute-taking. Although the poll was aimed at UK-listed companies, the general principles will also be relevant to private companies in the UK.

Surprisingly, use of AI is still limited, in practice, with 92% of respondents have not yet used AI in their minute-taking processes. Where companies have reported trialling AI technologies in preparing board and committee minutes, these are typically reviewed by a member of the company secretarial team.

Here are some key takeaways from the poll analysis:

• Generative AI can assist board-minute preparation and minute-taking in various ways, for example, the preparation of agendas, real-time transcriptions and the organisation and identification of actions. Some users of AI in the boardroom highlighted time and cost efficiencies, and the advantages of streamlining time-consuming and administrative tasks.
  
  
• The key risks involved in using AI include the following:
   
  • Accuracy - the accuracy of minutes could be affected by the risk of "hallucination" and AI's limited ability to filter information and exercise discretion. AI also lacks the contextual understanding to frame discussion appropriately and correctly identify the most relevant points.
  • Confidentiality - There is a risk that information would become part of a pool of data on which an AI product is trained. For certain confidential or highly sensitive board-level discussions (for example, strategy and financial results), companies should consider whether it is appropriate to use generative AI tools at all or whether those tools should be used only subject to certain conditions or restrictions, for example only where there are appropriate contractual confidentiality obligations placed on the model supplier or only where that use is of a locally hosted instance of the tool (to which the supplier does not have access). Listed companies should also ensure that any use of such tools complies with their market abuse obligations, in particular the requirement to keep insider lists.
  • Security - Companies should assess the extent to which the use of generative AI may increase their exposure to cyber-attacks and consider how best to protect against this risk.
  • Data privacy - Companies will need to take measures to ensure that the use of AI tools complies with their privacy and data protection obligations (for example, notifying the attendees of a board meeting if using an AI tool that continuously monitors and processes discussions of attendees).
  • Recording – There are reservations regarding the verbatim recording of confidential and sensitive discussions, given the risk they could be subject to disclosure in a litigation or regulatory context.
  • Impact on discussions – The recording of discussions may also affect directors' willingness to speak freely, which, in turn, has broader governance obligations.

The thresholds by which a UK company are classified by reference to its economic size under the Companies Act 2006 have changed. This impacts certain reporting obligations which are triggered by a company's size, for example the requirement to report on payment practices.

The UK Companies (Accounts and Reports) (Amendment and Transitional Provision) Regulations 2024 came into force on 5 April 2025 and so the changes will apply to financial years beginning on or after this date. The Regulations will increase by approximately 50% the annual turnover and balance sheet thresholds in CA 2006 for micro-entities, small and medium-sized companies. Any company exceeding the medium-sized thresholds will be classified as large. The employee thresholds will remain the same. Corresponding amendments will be made for UK LLPs. Previously, the qualifying conditions for each size classification required that a company did not exceed two out of three specified maximum thresholds for annual turnover, balance sheet total and number of employees. There will be some companies that were previously in scope that may now fall outside due to these changes.

The UK Companies House and HMRC joint accounts and company tax return filing service will close next year on 31 March 2026. The service no longer aligns to modern digital standards, enhanced corporation tax requirements or changes to UK company law under ECCTA. Companies should start preparing now by:

• downloading and saving at least 3 years of accounts filings, as they will no longer be able to access any previous filings on this service after 1 April 2026; and
• considering their software filing options and find a suitable software provider that can meet their filing needs for both Companies House and HMRC.

For more, read the UK Government's guidance on preparing for the closure of the online service.

Much of the UK's new Digital Markets, Competition and Consumers Act 2024 (DMCCA) came into force on 1 January 2025. These included the reformed competition law provisions (including new merger control thresholds for the UK Competition & Markets Authority (CMA) to be able to take jurisdiction over transactions) and the new regulatory regime for digital markets. The new consumer law provisions (see Section 6: Consumer law) came into force slightly later, on 6 April 2025.

The new merger control, competition law and consumer law provisions are applicable to all types of business, not just Big Tech, and some provisions have extraterritorial reach. 

Merger control – updated jurisdictional thresholds

In the merger control space, the DMCCA updates the UK's jurisdictional thresholds, as well as introducing the UK's first 'no-increment' share of supply test (to capture so-called 'killer acquisitions as well as vertical and conglomerate mergers) and a new safe harbour for 'small mergers'. Mergers will be exempt from review where each party’s UK turnover is less than £10 million. This provides welcome increased certainty over the application of UK merger control to, among other things, ‘foreign to foreign’ mergers where both parties have little or no UK turnover. The DMCCA also introduces a specific reporting regime for designated tech firms Read our key takeaways for more.

However, developments are fast-moving in the UK merger control space, with the UK Government and CMA already working towards new (and, in some areas, legislative) reforms only a matter of months after the DMCCA came into force.

Competition investigations – cross-border reach and increased penalties

The DMCCA also introduces substantive reform to investigations across the UK competition law sphere, strengthening the CMA's cross-border reach and significantly increasing the penalties that it may impose for failures to comply with its investigatory measures. Agreements made outside the UK which have anti-competitive effects in the UK are now within reach of a CMA investigation. And the CMA's information gathering powers now extend to overseas persons who are party to an in scope merger or have a UK connection. Read on for more.

New regulatory regime for Big Tech

The most talked-about reform is the new regulatory regime for Big Tech. Read our key take-aways here. The DMCCA empowers the UK's Digital Markets Unit (DMU) (a unit within the CMA) to designate the biggest digital players with 'Strategic Market Status' (SMS). Having designated a firm as having SMS, the DMU will:

• set ex ante Conduct Requirement's on designated firms i.e. rules on what those firms must and must not do;
• be able to make 'Pro-Competition Interventions' to remedy competition problems; and
•  require designated firms to report M&A activity before deals are completed.

The CMA said, back in January, that it expected to launch SMS investigations in three areas of digital activity over first six months of the new regime. To date, the CMA has opened investigations into whether to designate: (1) Google as having SMS in respect of general search and search advertising; and (2) Apple and Google as having SMS in the provision of their respective mobile ecosystems, including their respective mobile operating systems, native app distribution and mobile browser/browser engine.

The CMA, alongside other UK regulators, has been under pressure to align with, and advance, the UK Government's 'pro-growth agenda'. Merger control has come under fire, with the UK Government pushing for what, in their view, should be a more certain, proportionate, transparent and thus more business-friendly approach. The 'pro-growth agenda' has manifested in several ways in the competition law space.

• First, the UK Government's draft strategic steer to the CMA (published in February of this year) makes clear that the CMA is expected to "support and contribute to the overriding national priority of this government – economic growth".
  
  
• Shortly afterwards came the CMA's 'Mergers Charter' (published in March) – designed to enhance business and investor confidence, enhance perceptions of the UK as a great place to do business and, of course, to support growth. The Charter focuses on four areas: pace (streamlining the CMA's approach and minimising in-depth reviews), predictability (clarifying the CMA's remit), proportionality (getting to the right outcomes while minimising burden on business) and process (more direct engagement with businesses).

At the same time, the CMA launched a 'call for evidence', seeking views on how the CMA can balance different types of remedies in its merger control investigations. The CMA is looking at:

1. whether the standard for remedies to be accepted during a Phase 1 investigation can be lowered to enable more complex remedies to be accepted at an earlier stage;
2. whether the legal standard for the CMA to accept remedies, at any stage of an investigation, can be made more flexible;
3. whether there are better ways in which efficiency gains can be recognised; and
4. most notably, when and how behavioural remedies should be used - signalling a greater openness to behavioural remedies and a willingness to shift away from traditional divestment and structural remedies going forward.

• Also, in March, came the UK Government's policy paper "New approach to ensure regulators and regulation support growth". As a next step, the Government commits to bring forward a consultation "in the coming months" on proposed reforms "where the Government can take action to improve the pace, predictability and proportionality of the UK’s competition regimes". Notably, these proposed reforms are described as being "legislative" in nature, rather than further changes to CMA guidance, and will include measures to provide more certainty on when mergers will be subject to investigation in the UK by addressing uncertainty with the existing 'Share of Supply' and 'material influence' tests.

Read our briefing and watch out for our updates in this area – a fast-moving debate given, only a matter of months ago, the DMCCA retained the (uncertain and generous to the CMA) merger control 'Share of Supply' jurisdictional test in its current form.

With the first UK Labour Government since 2010 now firmly with their feet under the table, now is a good time to take stock of how the UK Government is approaching national security reviews under the UK's National Security and Investment Act 2021 (NSIA) regime.

In our briefing, we consider the new UK Government's approach to the NSIA, and delve into three areas where trends may potentially be emerging, namely:

• call-ins covering transactions in a wider cross-section of the UK economy;
• a move towards economic commitments to maximise investment into the UK; and
• a more relaxed stance on Chinese investments in specific sectors.

Whilst on the topic of national security, the UK Government won the first-ever challenge to a divestment order under the NSIA in November 2024 – in the LetterOne appeal. In fact, this was the first ever judgment on the UK Government's application of the National Security and Investment Act 2021 to be handed down.

With a focus on the procedural aspects of the review, the UK High Court upheld the Government's decision to require LetterOne (ultimately owned by Russian nationals, including individuals subject to UK sanctions) to divest the entirety of its shareholding in Upp, a fibre broadband start-up. 

The judgment sets out a high degree of deference that the courts will afford the UK Government in its NSIA reviews and describes a high bar for parties subject to remedies orders seeking to overturn them. The judgment makes some interesting comments on the consideration of current versus future national security risks (i.e. whether the UK Government can act now to prevent risks from materialising). It also comments on how significant financial losses for parties subject to divestment orders will be viewed (spoiler: they are likely to be simply part of the economic landscape for those operating in the alt-net sector or other parts of national infrastructure).

This high bar was also seen in the later (February 2025) UK High Court judgment on the first ever request for interim relief in a judicial review challenge under the NSIA. The request was made as part of FTDI Holding Limited's challenge against an NSIA final order requiring the divestment of an 80.2% shareholding in a Scottish semiconductor company due to national security concerns. In refusing the request (and in line with the earlier LetterOne judgment), the High Court re-confirmed the high degree of deference to be granted to the UK Government in national security cases - in short, “public interest weighs heavily against the grant of interim relief.” Again, potential influence by malign actors was found to be enough for the refusal. The judgment also confirmed the arguably low standard that the Government needs to reach in terms of disclosure.

In this briefing we discuss the key elements of the UK High Court's LetterOne judgment and our views on the future for procedural challenges across investing in the UK and the NSIA landscape.

As mentioned earlier, most of the consumer law provisions of the UK Digital Markets, Competition and Consumers Act 2024 came into force on 6 April 2025. These changes give the UK one of the toughest enforcement regimes in the world, with the prospect of fines of up to 10% of global turnover on B2C businesses for infringing UK consumer law.

We expect the UK Competition and Markets Authority (CMA) to take prompt action to show that it is making an impact on behalf of consumers (having been strongly encouraged to do so by the UK Government's draft "strategic steer" to the CMA). The legislation also introduces new rules on fake reviews, "drip pricing" and (from next year) subscription contracts. For more detail, see our briefings:

• The UK’s tough new consumer regime: is your business ready for the 6 April start date?; and
• Major changes to UK consumer law are imminent: is your business ready?

Businesses with no presence in the UK should not assume that they are outside the reach of the legislation and UK regulators.  The 2024 Act contains various provisions enabling regulators to enforce against non-UK businesses which are directing their activities at consumers in the UK.

Gambling company Paddy Power's consumer terms and conditions recently failed to protect it against having to pay out over £1 million, after an online game mistakenly indicated that a player had won a "Monster Jackpot". Our briefing discusses what lessons can be drawn from this dispute and two previous cases involving similar claims for million-pound wins. We also look at the wider implications for B2C contracts, beyond the sphere of online games.

Many UK business-to-consumer (B2C) businesses face the possibility that services they have agreed to provide may not go ahead as planned – but is it fair for the business to retain or demand any payments where this has happened? The UK Court of Appeal has recently ruled that a term in a contract for legal services was unfair, because it required the consumer to pay the full projected fees, even where the relevant hearing was delayed. Our briefing explains why the UK Court reached this conclusion and looks at the wider lessons for providers of consumer-facing services.

As EU-based firms will be aware, from 1 July 2025, the 2019 Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil and Commercial Matters (2019 Hague Convention) comes into force between the UK, the EU (except Denmark) and other states . It provides for recognition and enforcement of a judgment given by a court of a contracting state not designated in an "exclusive" choice of court agreement. 

The most important benefit of the 2019 Hague Convention is that it will, although by no means universally, apply to a wide range of English civil and commercial court judgments. This is an improvement on the position under the 2005 Hague Convention on Choice of Court Agreements, which only assists as regards recognition and enforcement of judgments arising from contractual disputes, and even then, only those governed by exclusive jurisdiction clauses. The 2019 Hague Convention will allow UK parties to more easily enforce many more judgments in contracting states, as well as to agree non-exclusive or asymmetric English jurisdiction clauses in contracts with parties from other contracting states. Qualifying English court judgments arising from those clauses should generally be enforceable in those states – including, importantly, in all EU member states (except Denmark). This will strengthen the ability of the English courts to deal with cross-border disputes.

Crucially, the application of the 2019 Hague Convention does not depend on when a relevant jurisdiction clause was entered into. It will apply to proceedings started after the 2019 Hague Convention comes into force for both the state in which a judgment originated and the state in which that judgment needs to be enforced.

You can read more about the implications of the 2019 Hague Convention here. For a reminder of the general existing position as regards jurisdiction clauses and enforcement of judgments post-Brexit, read this briefing.

The long-awaited UK Arbitration Act 2025 (AA 2025) was signed into law on 24 February 2025. Whilst the UK Arbitration Act 1996 remains the principal Act governing arbitration in this jurisdiction, the AA 2025 makes targeted amendments and brings welcome clarity to areas of uncertainty.

The AA 2025 sets a new default rule that the governing law of an arbitration clause is the law of the seat of the arbitration, unless the parties expressly agree otherwise. The AA 2025 also codifies a new statutory duty regarding what arbitrators must disclose to the parties (any circumstances that might reasonably give rise to justifiable doubts about their impartiality). It also clarifies the powers of courts to make orders in support of arbitration proceedings and to enforce the orders of emergency arbitrators. These reforms will make arbitration more predictable and user-friendly.

The AA 2025 also includes changes which will help make arbitration more time- and cost-efficient. It introduces a power for arbitral tribunals to summarily dispose of claims or defences that have no real prospect of success. This is similar to the strike out and summary judgment powers of the English courts and will make it easier to dispose of weak and vexatious claims and defences. The AA 2025 also streamlines challenges to arbitral awards on the grounds that the tribunal did not have jurisdiction, by limiting the arguments and evidence that can be put forward.

The new provisions of the AA 2025 will apply to all arbitration agreements, whenever they were made (although not where arbitration or court proceedings have already been commenced). The reforms will enter into force on a date yet to be determined, although the UK Government has indicated that this will be done via regulations shortly. The reforms will ensure that arbitration remains an attractive option for dispute resolution in this jurisdiction.

For more, read our briefing and get in touch if you would like to discuss how these reforms affect existing arbitration agreements, or if you would like to learn more.

Employers in the UK need to ensure that staff handbooks and relevant family friendly policies are updated to refer to the new right to neonatal care leave for parents. From 6 April 2025, leave is available where the child goes into neonatal care for at least seven days within 28 days of birth. Eligible employees in the UK are entitled to up to one week of leave for each full week the child spends in neonatal care, up to a maximum of 12 weeks' leave. The leave must be taken within 68 weeks of the child's birth and will typically be taken after maternity, paternity, adoption or shared parental leave. There is no service requirement for the leave, but parents need at least six months' service with their employer to be eligible for statutory pay – this is paid at the same statutory rate as maternity pay (from 7 April 2025, £187.18 per week or 90% of average weekly earnings if lower). UK employers may also wish to consider how the right will interact with existing enhanced family leave and pay arrangements.

Employers in the UK with 250 or more employees must report on their gender pay gap figures annually. The UK Government has launched a public consultation setting out proposals to introduce mandatory disability and ethnicity pay gap reporting. The new reporting requirements would mirror the existing framework for gender pay gap reporting and apply to employers with 250 or more employees. However, there are distinct considerations for ethnicity and disability, particularly regarding data collection and analysis. It is proposed that, in addition to pay gap figures, employers would be required to report on the overall breakdown of their workforce by ethnicity and disability, as well as the percentage of employees not disclosing their personal data for these characteristics.

The UK Government is also seeking views on whether employers should be required to produce action plans, to help identify the causes of any gap and action to close it. Like gender pay gap reporting, employers would be required to report their ethnicity and disability pay gap figures online annually. The consultation closes in early June, with the new pay gap reporting duties not expected to come into force until 2026.

A new Employment Rights Bill will introduce a number of significant reforms to UK employment law which will apply to businesses employing staff in the UK, including businesses which are headquartered overseas (UK employers). It is anticipated that the Bill will be passed later this year, but most of the reforms are not expected to come into force before 2026. Key changes include:

• Dismissals: making it more costly and difficult to dismiss staff by extending the protection against unfair dismissal. The current two-year qualifying service requirement for unfair dismissal claims will be removed, with a new statutory probationary period introduced, during which a light-touch dismissal process will apply.
  
  
• Flexible working: introducing a new requirement on UK employers to demonstrate that any rejection of a flexible working request is reasonable.
  
  
• Diversity reporting: requiring large employers to publish menopause and gender pay gap action plans, alongside existing gender pay gap reporting requirements, and introducing mandatory ethnicity and disability pay gap reporting (see above).
  
  
• Large scale redundancies: changing the threshold for collective redundancy consultation requirements so that the duty is triggered more easily and doubling the penalties that apply for failure to comply.
  
  
• Restructuring: severely restricting "fire and rehire" practices, making it much more difficult for employers to change terms and conditions of employment without employees' agreement.
  
  
• Casual and agency workers: introducing new rights for casual and agency workers to be offered a contract reflecting the hours 'actually worked', and to receive reasonable notice of shifts and compensation when shifts are cancelled.
  
  
• Trade unions: requiring UK employers to provide staff with information about trade union rights and making it easier for trade unions to call strikes and seek the right to bargain collectively on behalf of workers.

For more about the UK Government's plans and what they mean for employers, read our briefing Employment Rights Bill What does it mean for UK employers? | Travers Smith.

Our latest Spotlight focusses on the energy and infrastructure implications of the new UK Government's first fiscal Budget. It also looks at new initiatives affecting the UK water industry and UK infrastructure investment more generally.

Infrastructure Spotlight – Autumn/Winter 2024 | Travers Smith

Our bitesize Energy & Infrastructure video series provides digestible horizon scan updates on the key developments in the UK across ten different topical areas of sustainable infrastructure.

Private Finance Initiative (PFI) deals have recently been in the UK news, with headlines about disputes between UK public sector customers and private sector owners and operators as contracts near their expiry date. Our briefing looks at the issues around PFI expiry and discusses the following:

• What was PFI used for and why is expiry an issue?
• Risks for PFI owners/operators – and risks for PFI customers
• Opportunities for the private sector from PFI expiry

As we reported in our spring 2024 briefing, the UK listing and prospectus regimes are being overhauled, with the aim of making London a more attractive place for companies to list and remain listed. Here, we focus on two capital raising initiatives (outside the listed company arena) which are actively being pursued by the UK Government at the same time as the UK listing and prospectus reforms.

The Private Intermittent Securities and Exchange System (PISCES) will be a new type of UK regulated trading platform for unlisted securities and forms a key part of the UK Government's agenda to reform and reinvigorate UK capital markets. The UK Government hopes that PISCES will provide private companies and unlisted public companies (whether incorporated in the UK or overseas) with a stepping stone to listing on public markets and provide investors with more opportunities to invest in growth companies allowing them to share in their returns.

PISCES will operate as a secondary market allowing for the trading of existing shares during intermittent trading windows, for example ad hoc, quarterly, biannually, yearly or as determined by the issuing company. A UK company will not be able to raise new capital by issuing shares on a PISCES platform.

The wide group of potential participants in a PISCES platform include:

• existing shareholders;
• persons who are employees or directors or other officers of the participating company or of another company within the same group as the participating company;
• persons who (directly or indirectly through a third party) provide services to the participating company or to another company within the same group as the participating company;
• high net-worth individual investors or companies and self-certified or certified sophisticated investors;
• a person who is a trustee of an employee share scheme or of a share incentive plan, of the participating company; and
• financial intermediaries, including financial intermediaries of the PISCES operator and of the participating company.

The UK Government had hoped to deliver the necessary legislation by May 2025, but there is no launch date yet.

Public offer platforms (POPs) are another one of the building blocks being proposed as part of the overhaul to the UK capital markets.  A POP will allow UK companies (without the need to publish a prospectus) to offer (outside the public markets) shares to the public where the total value of the offers is more than £5 million over a 12-month period. The aim of a POP is to make it easier for UK unlisted companies to raise capital (either by way of equity or debt securities) by reducing the costs of raising this capital.

POPs are principally (although not exclusively) aimed at crowdfunding platforms operating in the UK.  At present, the majority of fundraising through these platforms is well below the £5m threshold.  This, according to the UK Financial Conduct Authority (FCA), is in part due to the disincentive of the costs of producing a prospectus and the fact that crowdfunding is typically used by companies in the early stages of their development.  In allowing POPs to operate above the £5 million threshold, the FCA is hopeful that more companies will make public offers above that threshold and, additionally, this should incentivise new operators to enter the POP market.

The UK FCA expects POPs to predominantly engage with retail investors, although the FCA is hoping that boutique corporate finance firms that place securities privately with qualified investors will take the opportunity of becoming a POP to facilitate offers on behalf of issuers to a wider investor base.

The FCA's consultation on POPs is not yet complete, but indications are that the framework for POPs will be in place in summer 2025 with the rules coming into force in January 2026.

As EU-based firms will be aware, after months of speculation, the EU Commission announced a "simplification revolution" at the end of February 2025, and published its sustainability "Omnibus" package, designed to simplify the EU's sustainability regulatory framework. It is now clear that there will be significant changes to EU sustainability regulation.

The "Stop-the-Clock" proposal to delay sustainability reporting under CSRD and due diligence obligations under the Corporate Sustainability Due Diligence Directive CS3D was approved by the European Parliament on 3 April, with immediate consequences for many large companies preparing CSRD reports. Member States of the EU must amend their own national CSRD implementing law by 31 December 2025 to provide that reporting obligations for large undertakings and groups and PIEs which are SMEs are paused for 2 years – rather than having to report in 2026 and 2027 respectively, these undertakings/groups would now need to report in 2028 and 2029 respectively. The reporting deadlines for non-EU groups would not be amended. In the meantime, the European Commission expects to be able to finalise the substantive text which would take approximately 80% of currently in-scope companies out of scope entirely, if the proposed scope thresholds are adopted. However, the European Parliament is already markedly divided on what approach to take to the main text.

The Stop-the-Clock directive will be welcomed by many businesses relieved of the burden of reporting next year, particularly those expecting to be below the proposed thresholds for reporting in the future. Many companies are, however, expected to continue with well-progressed preparations to report in the short term, but they will have more flexibility to step outside the strict confines of the ESRS and potentially even dispense with assurance by publishing their report separately from the management report, should they so choose. Those companies will, however, need to be very aware of greenwashing risks – their reports will no doubt be scrutinised by NGOs and it will be important that any data and claims are robustly checked before publication. Other companies may opt to redirect their energy and resources to sustainability action rather than sustainability reporting.

For more, read Simplification or Deregulation? The EU's Sustainability Omnibus Explained | Travers Smith and The clock stops, but the bus rumbles on – CSRD Omnibus clears its first hurdle | Travers Smith.

The CBAM is, effectively, an import tax on carbon intensive products, such as cement, steel, iron, aluminium and electricity. As addressed above, the Omnibus proposed changes to the CBAM scheme to reduce to the administrative burden on small and medium sized enterprises and occasional importers. Scoping would be determined according to total volumes of imported CBAM goods, rather than based on the value of individual shipments. This is expected to relieve around 90% of participants whilst continuing to cover 99% of emissions from CBAM goods. The most drastic amendment being introduced is a de minimis threshold of 50 tonnes per year (to replace the prior de minimis threshold of €150 per load). As this will exempt small and occasional importers, this change is expected to keep around 99% of emissions still in scope, whilst exempting around 90% of importers who are currently required to purchase a CBAM certificate. Furthermore, the obligation to purchase a CBAM certificate has been delayed, starting in 2027 for emissions embedded in goods imported during 2026.

As reported in section 4, the UK Economic Crime and Corporate Transparency Act 2023 (ECCTA) introduced a new failure to prevent fraud offence (FTPF Offence), intended to hold large organisations to account for fraud committed by their associates. The FTPF Offence has extraterritorial effect and will come into force on 1 September 2025. See section 4 for details of how the FTPF Offence applies outside of the UK.

Under the FTPF Offence, organisations will be liable where an employee or agent commits a fraud offence, for the organisation's benefit, and the organisation did not have reasonable fraud prevention procedures in place. In-scope companies should consider implementing the necessary policies and procedures in advance of this date.

In-scope organisations may consider doing the following:

1. Review any existing procedures that may have been implemented in respect of the failure to prevent tax evasion offence (under the CFA) or the failure to prevent bribery offence (under the UK Bribery Act) to ensure that they remain suitable in light of ECCTA.
2. Carry out an anti-fraud risk assessment to assess the risk of fraud being committed by an associated person for the benefit of the organisation.
3. Implement due diligence measures to mitigate against any material risks identified in the anti-fraud risk assessment.
4. Implement a new fraud prevention plan, based on the findings of the risk assessment and any due diligence measures implemented.
5. Appoint a nominated person responsible for fraud prevention in your organisation, and each subsidiary.
6. Carry out regular training of staff and employees, including tailored training for high-risk members of staff and senior management.
7. Monitor and review your fraud prevention procedures on an ongoing basis.

For further details on the FTPF Offence, its scope, potential penalties for failure to comply and how in-scope organisations can make use of the defences that apply, see our briefing.

The UK Government's Technical Advisory Committee (TAC) on UK Sustainability Disclosure has released its technical assessment and endorsement recommendations in respect of the ISSB Sustainability Reporting Standards. This advice is expected to form the basis of a Government decision to endorse and adopt the standards as UK national standards in 2025, though at the time of writing the UK Government has not adhered to its own timetable of publication in Q1. If such an endorsement decision is made, it is expected that listed companies will be required to report in accordance with them, potentially as soon as financial years beginning on or after 1 January 2026. Large UK private companies currently reporting non-financial and sustainability information under the Companies Act are expected to be covered later, potentially from 2028 or 2029.

The proposed national standards do not deviate significantly from the ISSB's international standards. It is proposed that the first two years of reporting would only require climate-related financial disclosures (under the S2 standard), with an extension to general sustainability matters (under the S1 standard) in the third year.

Late last year, the UK Government launched a consultation on a UK Green Taxonomy. The purpose of this Taxonomy is to establish a framework to define which investment activities support climate, environmental and sustainability goals. The consultation sought views on whether to proceed with a Taxonomy rather than on introducing any specific requirements to report using one. The consultation has now closed, and we look forward to reporting on the results in due course.

The UK's Financial Conduct Authority (FCA) is intending to introduce a transition plan disclosure obligation whilst listed companies move from TCFD to UK-endorsed ISSB standards.

As part of IFRS S2, companies must disclose any climate-related transition plan they have. The intention behind this is to better equip investors to assess a company's future prospects. The FCA has confirmed that they will refer to the framework produced by the Transition Plan Taskforce, which was designed to help businesses report their transition plans in line with IFRS S2 more effectively.

A new UK Action Plan for regulation aims to streamline administrative processes and cut costs for businesses in order to create a regulatory system that supports economic growth. The plan includes several "pledges" from regulators including the UK FCA, Environment Agency, Natural England, Ofgem and the HSE (among others) which should be implementable within the next 12 months.

The plan proposes to cut administrative costs for businesses by 25% by the end of the UK Parliament. This will include undertaking an exercise to understand the cost of regulation and identify where the system can be reformed. The plan will also aim to improve the transparency of regulators and effect a simplification of their key duties and roles, merging and consolidating between key regulators where appropriate. Excessive reporting is noted as a particular source of burden for companies.

Also set out in the plan are specific environment and planning and health and safety targets which are all aimed at increasing efficiency in administrative processes.

UK lenders offering motor finance are likely to have been inundated with claims from customers in relation to loans arranged by vehicle dealers, following the UK Court of Appeal's landmark decision in Hopcraft, Johnson and Wrench in October 2024. The UK Court held that it was unlawful for car dealers (who acted as brokers) to receive a commission from a lender providing motor finance without obtaining the customer’s informed consent to the payment. The Court held that, in each of three cases brought by aggrieved individuals, the lender was liable to compensate the consumer for the commission that had been paid by the lender to the dealer. Read our briefing on the impact of consumer claims for rebate of commission on speciality finance transactions.

At the time of publication, we await the judgment of the UK Supreme Court, which heard the appeal at the beginning of April. Watch this space for more.

Finance documents frequently include so called "one-sided" (or asymmetric) jurisdiction clauses, whereby the parties submit to the "exclusive" jurisdiction of (e.g. English) courts, but finance parties reserve themselves the option to bring proceedings in any other courts which may have jurisdiction. Lenders like such clauses, because it allows them to wait until a dispute arises before deciding where to bring proceedings. However, Brexit has limited their effectiveness.

The 2005 Hague Convention, to which the UK acceded post-Brexit, only provides for recognition of submission to jurisdiction and enforcement of a judgment given by a court of a contracting state designated in a genuinely "exclusive" choice of court agreement. This has led to parties in some transactions opting for an "exclusive" jurisdiction clause, effectively favouring certainty over flexibility.

From 1 July 2025, the 2019 Hague Convention comes into force between the UK, the EU (except Denmark) and other states. It provides for recognition and enforcement of a judgment given by a court of a contracting state not designated in an "exclusive" choice of court agreement. This includes a judgment on a document with no jurisdiction clause or one with a "one-sided" jurisdiction clause. For more, go to Dispute resolution.

The UK Government will soon announce greater flexibility on accessing surpluses in UK defined benefit (DB) pension schemes, with a view to helping UK economic growth through investment in the employer's business and in the wider economy. No detail has been given, yet, but the key points are:

• Restrictions will be lifted on how "well-funded" schemes that are "performing well" will be able to invest their surplus funds - "in the wider economy, fuelling economic growth".
  
  
• It will be easier to amend scheme rules to allow surplus extraction, with pension trustees and employers striking a deal on sharing surplus between the employer and members.

As part of its economic growth agenda, the UK Government wants to see defined contribution master trusts and group personal pension providers in the UK consolidate into 'megafunds' by 2030 (though possibly with a period of phasing-in). There are currently around 30 master trusts and 30 group personal pension providers in the UK workplace pensions market. The UK Government believes that consolidating these into around 24 such arrangements in total, each being at least £25 to £50 billion in size, will naturally lead to greater investment in infrastructure, private equity and other drivers of economic growth. The consolidation would be brought about by imposing a minimum asset value for the default arrangements and a maximum number of such arrangements. Employers' private schemes are not in scope but will become subject to a new 'value for money' assessment and reporting requirements that are also aimed at increasing consolidation.

UK Inheritance tax (IHT) is to be applied to "most unused pension funds and death benefits". It will bring these into a person’s estate for IHT purposes from 6 April 2027, though the spouse/civil partner exemption will continue to apply. This would effectively remove the distinction between the IHT treatment of funds paid out under a binding nomination (which is already subject to IHT), and those paid out to a beneficiary chosen at the pension trustees' or managers' discretion after considering a non-binding nomination (which legitimately avoids IHT).

This is intended to stop those who can afford it from using pensions as a vehicle for passing on assets to children or grandchildren free of the 40% IHT charge that would apply if the assets were in their estate. This will, however, affect many more people (or rather their survivors) than those who do that, in particular unmarried people.

Some DB lump sum death benefits will also be in scope but there is currently little clarity on this, and it may depend on how the benefits are set up (for example, whether they are provided under a registered pension scheme and whether they are insured).

The UK Government is proposing to raise the minimum energy efficiency standard required of privately rented homes in England and Wales to the equivalent of Energy Performance Certificate (EPC) C by 2030. With a new Energy Efficiency Rating (EER) methodology also tabled for the UK in 2026, UK landlords will be need to understand what an EPC C rating looks like under the new metrics. 

The current minimum energy efficiency regulations (MEES) require privately rented homes in the UK to meet a standard of EPC E before a property can be let unless a valid exemption applies. For dwellings, the EPC E standard is based on the EER, calculated using modelled energy costs per square metre based on standardised heating patterns, temperatures, and fixed fuel price assumptions. 

The latest proposals raise several questions for private rented sector landlords in the UK:

• Minimum spend: UK landlords who have spent at least £15,000 on energy improvements for a unit which still does not meet the minimum EPC rating would be able to register an exemption. The UK Government is seeking feedback on whether that cap is the right level, and whether the exemption period (currently set at five years) should be extended to ten years. UK landlords will want to know what financial help will be available to them to pay for these works – will the UK's Green Deal be revitalised? If not, how will their interest payments on any works loans be treated?
  
  
• Transition period: It is proposed that new tenancies would have to meet the higher standard from 2028 and all tenancies, new and continuing, would be required to meet the higher standard by 2030. Landlords should be able to rely on their current EPCs, meaning that properties with an EPC rating of C obtained before 2026 should be recognised as compliant with the future standard until their EPC expires or is replaced. We will have to wait until the outcomes of the consultations are known, but it will certainly be tempting for landlords to get new EPCs this year if they are already scoring a C or above on the current metrics.
  
  
• Onwards trajectory: Do these proposals suggest that the UK Government will mandate an EPC rating B or A, at some point in the future. For business certainty, landlords will need to understand the long-term MEES requirements in order to plan finances and also, on a practical level, to decide how best to carry out the necessary works. Landlords of commercial properties are also waiting for clarity as to whether the MEES regime will be updated for their sector.

For more, read our briefing for more information.

As we discussed in our last edition of the UK Legal Update, the UK's Leasehold and Freehold Reform Act 2024 (LFRA 2024) was one of the final pieces of UK legislation enacted by the previous UK government in July 2024 with the aim to substantially improve the rights of residential long leaseholders of houses and flats in England and Wales. In the UK, leasehold title is a common form of property ownership. In comparison with freehold title, leasehold title is limited, as leasehold owners are tenants of a property for a fixed period of ownership.

Two provisions of the LFRA 2024 are now in force:

• residential leaseholders no longer need to have owned their lease for two years before being able to instigate their rights to enfranchise or claim a lease extension (effective from 31 January 2025); and
  
  
• the statutory 'right to manage' is now available for residential leaseholders in mixed-use premises where the internal floor area used (or intended to be used) for commercial purposes does not exceed 50% of the building's total internal floor area (excluding common parts) (effective from 3 March 2025). This limit was previously 25%.

These are the first in the series of changes intended to be brought into force by the LFRA 2024. Watch this space for news of more in the coming months.

The Commonhold White Paper contains the UK Government's proposals for legislating that all new flats in England and Wales, subject to certain unspecified exemptions, will be offered for sale under the commonhold model instead of the current UK leasehold model.

What does the White Paper mean for businesses in the UK?

• Landlords of existing residential property in England and Wales: At present there is no change for landlords of existing residential buildings or their lenders, although they should be aware that the UK Government plans to focus on devising a better system for converting leasehold flats to commonhold flats than the mechanism in the current UK legislation. The White Paper indicates that the Government prefers the "mandatory leaseback" form of conversion outlined by the Law Commission, which would require the freeholder to take a leaseback and become the head-lessee in respect of flats whose owners did not consent to the conversion to commonhold. Their interest would sit between the CA and the leaseholder under a 999-year lease, under which they would receive any ground rent but would be unable to participate in decision-making because they would not be a unit owner. Landlords should therefore consider taking advice on what this could mean for them.
  
  
• Residential developers: developers of residential schemes in England and Wales will need to adapt to the new commonhold regime. The UK Law Commission's recommendations include suggestions that are intended to balance the unit-owners' rights to run their own buildings against the developer's need to have some control over the scheme while it builds out subsequent phases.
  
  
• Current leaseholders in England and Wales: will not be affected by the White Paper, although it stresses that the UK Government intends to streamline the current complex process for converting leasehold schemes to commonhold. There is therefore a danger, in the meantime, that a two-tier market may develop whereby flats in leasehold schemes could be devalued.
  
  
• UK private rented sector: short-term let tenants, such as assured shorthold tenants, will not be affected by this change. Their landlords will not be affected either unless they are long leaseholders themselves (see above). The commonhold regime permits leases granted for less than 7 years without a premium being paid, so it will still be possible to sub-let a commonhold flat unless the CCS for a particular building says otherwise.

For a summary of the key provisions of the White Paper, read our briefing.

The UK's Building Safety Act 2022 gives the UK Government the power to impose a building safety levy on all new residential buildings in England (Levy). The aim is to extract £3.4bn from residential developers over the next 10 years to fund the remediation of safety defects. Many had hoped that the Levy had drifted down the UK Government's priority list, trumped by an overriding manifesto promise to build 1.5 million homes by 2029. However, the UK Government recently confirmed that the Levy is still very much part of its plans, but that it will not come into force until Autumn 2026 (a year later than previously planned).

The Levy applies irrespective of whether the developers that will now be paying it were responsible for historic building safety failures. In doing so, the Levy upholds the UK Government's firm commitment that neither the taxpayer nor tenants should pay for the cost of historic safety defects. The Levy comes on top of the UK 2023 Developer's Pledge – where the Government forced 52 major developers in the UK to commit to self-remediating 'life critical' fire safety works in buildings over 11 metres that they played a role in developing or refurbishing over the last 30 years. Further, the Levy will be charged in addition to the Government's UK-wide residential property developer tax – a 4% tax on profits exceeding £25 million arising from residential property development. Caught in a whirlwind of additional taxes and requirements, planning and tenure reform, only time will tell the true impact of the Levy on the residential development sector.

The new UK Government's first Finance Bill received Royal Assent on 20 March 2025 and became the Finance Act 2025. For the benefit of businesses based in the UK or those with UK operations, here's a brief overview of its key provisions:

• UK Corporation tax: maintaining the main rate of corporation tax for financial year 2026 at 25%.
  
  
• UK Capital Gains Tax:
  
  
  • for disposals made on or after 30 October 2024, both (i) an increased lower rate of CGT (for basic rate taxpayers) from 10% to 18%, and (ii) higher rates of CGT for higher rate taxpayers, trustees and personal representatives, from 20% to 24% (see Section 16: Tax – Incentives and Personal for more);
  • reforms to the taxation of carried interest (see Fundamental reform of carried interest taxation in the UK below for more); and 
  • increased rates of taxation for business asset disposal relief (BADR) and investors' relief.
    
    
•  International:
  • new Undertaxed Profits Rule (UTPR) – which took effect from 31 December 2024 – and repeals the Offshore Receipts in respect of Intangible Property (ORIP) regime. The UTPR is a component of Pillar 2 (the global minimum tax) designed to prevent multinational enterprises from exploiting low-tax jurisdictions by allowing the imposition of additional taxes on undertaxed overseas profits; and
  • changes to the operation of PAYE for internationally mobile employees.
    
    
• Domicile: replaces the UK's rules for non-domiciled individuals with a new, residence based, regime tax regime from 6 April 2025 (see Replacement of non-dom tax regime from 6 April 2025 below for more).
  
  
• SDLT: increases the SDLT surcharges on the acquisition of additional dwellings and properties (see UK real estate - SDLT surcharges increase below for more).
  
  
• UK Carbon Border Adjustment Mechanism (CBAM): providing HMRC with certain powers to prepare for the introduction of the CBAM, expected to take effect from 1 January 2027.

The UK Government published a Corporate Tax Roadmap alongside the Autumn Budget 2024. Intended to "provide clarity about the major features of the [UK's corporation tax regime] and highlight some areas where the government expects to consider changes", the main aim of the Roadmap is to create predictability, stability, and certainty for the duration of the current Parliament. It contains several commitments, including:

• Corporation Tax rate & base: maintaining current corporation tax rates.
  
  
• International:
• Pillar 1: finding an international solution for the challenges caused by the digitalisation of the global economy; and
• Pillar 2: to ensure that the UK's domestic rules implementing the Income Inclusion Rule (IIR), Domestic Minimum Tax (DMT), and Undertaxed Profits Rule (UTPR) continue to reflect internationally agreed updates.
  
  
• Making Tax Digital: continuing the digitalisation of the administration of Corporation Tax, with the aim of improving customer experience and easing administrative burdens.

In addition, the Roadmap sets out a number of areas that the Government intends to review and potentially reform. These include:

• International – to consult or review:
• the UK's transfer pricing rules, including the potential removal of UK-to-UK transfer pricing, lowering the exemption threshold for SMEs, and requiring multinationals to report cross-border related party transactions to HMRC;
• the domestic law definition of 'permanent establishment';
• the operation Diverted Profits Tax (DPT);
• possible further simplification of the UK’s international tax framework now that Pillar 2 has been implemented. As part of this, following the introduction of the UTPR, the Offshore Receipts in respect of Intangible Property (ORIP) regime was repealed by Finance Act 2025 with effect from 31 December 2024; and
• the continued application, and possible repeal of, the UK's Digital Services Tax (DST) during 2025 "in light of the progress made on Pillar 1".

For more detail, please see our UK Budget briefings, Autumn Budget 2024 - Business Taxes, and Autumn Budget 2024 - International.

The Stamp Duty Land Tax (SDLT) surcharge on the purchase of any additional residential property in the UK by companies increased from 3% to 5% on 31st October 2024. In addition, the SDLT rate for companies acquiring a dwelling for more £500,000 (the ATED-related SDLT charge) also rose from 15% to 17%. The purpose behind these rises is to further discourage the purchase of second homes and buy-to-let properties, enabling more properties to be acquired by first-time buyers. 

SDLT will normally be chargeable on the date of completion of an acquisition. However, it can be earlier where there has been "substantial performance", such where rent payments have been made or where early possession of the property is taken. Transactions substantially performed before 31st October 2024 will be subject to the previous 3% rate.

It is worth noting that the SDLT surcharge for non-UK residents remains at 2%. However, this surcharge can still compound with the new 5% surcharge, resulting in a potential SDLT charge of 19% for affected transactions.

Top of the watch-list for many at last year's UK Autumn Budget were the reforms to the UK's carried interest tax regime. 

The current minimum tax rate for carried interest rose to 32% (from 28%) for the 2025/2026 tax year. More fundamentally, from 6 April 2026, all carried interest (whatever its underlying source) will be taxed exclusively as trading income. Trading income is taxed at rates of up to 45% plus 2% national insurance contributions (NICs), but a discount mechanism will be applied to “qualifying” carried interest to give an effective tax rate (including NICs) of just over 34%.

To be “qualifying”, carried interest must not fall within the UK’s “income-based carried interest” (IBCI) rules – these rules, broadly, require the underlying fund to have a weighted average holding period for its assets of at least 40 months. In an important change, the IBCI rules will apply to all carried interest holders including employees (currently, only self-employed LLP members are in scope).

The UK Government is considering whether a minimum co-invest condition or a minimum hold period before carried interest pays out should be attached to “qualifying” status.

Non-residents

Currently, non-residents are not generally subject to UK tax on carried interest. This because they are typically outside the scope of CGT (and so not subject to tax on carried interest in the form of capital gains or within the minimum 28% charge) and most other investment returns in fund structures do not usually generate UK tax liabilities for non-residents (e.g. distributions, interest and returns of loan principle).

That being said, for non-residents who are both (i) non-employees and (ii) in receipt of IBCI, a trading income charge can arise on their carried interest, based on the extent to which they perform UK services. HMRC considers that this charge can potentially be relieved pursuant to a double tax treaty (DTT) between the UK and the relevant executive's jurisdiction of residence, provided that the relevant individual does not have a personal UK "permanent establishment".

At just over 34%, the UK will still have a competitive effective tax rate for carried interest, albeit narrowly the highest amongst other mainstream European jurisdictions. In addition, the move to a trading income regime has the potential to give rise to difficult technical issues, especially for non-residents. It will therefore be important that the Government carefully structures the new regime to make it straightforward to apply and ensures that any additional conditions for “qualifying” status (beyond the IBCI rules) can be met by normal commercial carried interest arrangements.

There may also be some winners under the new rules. UK executives who currently pay over 34% on their carried interest returns may end up better off with the new flat rate of just over 34% from 6 April 2026. This could be relevant for credit, infrastructure and real estate strategies that generate significant interest or rental income.

For more detail, please see our UK Budget briefing.

On 6 April 2025, the UK's current "non-dom" tax regime was replaced with a new residence- based regime. Broadly, individuals who become UK resident after 10 tax years of non-UK residence can choose not to pay tax on foreign income and gains (FIG) arising in the first four tax years after becoming UK resident. In addition, from 6 April 2025, inheritance tax moved from being based on domicile to being based on residence.

Under the UK's salaried members rules, a member of an LLP can be treated as an employee rather than self-employed for tax purposes, such that employer NICs and PAYE obligations arise. However, the regime will not apply if the individual has any of three facets of true partner-like status:

• the individual's remuneration is sufficiently variable by reference to the LLP's overall profits,
• the individual has "significant influence" over the LLP, and
• the individual has made a sufficiently large capital contribution. 

However, there have been important recent developments in relation to the last two of these facets. 

Significant influence – a narrower interpretation

Earlier this year, the Court of Appeal, overturning the decisions of the lower tribunals, held that "significant influence" must be construed narrowly. It held that the influence must derive from the legal rights and duties of the members and indicated that the focus should be only on strategic influence which itself should be over all the affairs of the partnership. This decision markedly restricts the scope of significant influence as compared to the lower tribunals' interpretation. We are waiting to hear whether BlueCrest will be granted permission to appeal to the Supreme Court. For more details, please see our briefing.

Capital contributions

Last year, HMRC controversially amended its published guidance on the salaried member rules to say that, in its view, increases in capital contributions made solely to fall outside the salaried members rules would be ineffective. Following strong concerns and disquiet expressed by many (including those in the private capital industry), HMRC decided to conduct an internal review of those changes. After months of uncertainty, HMRC has now concluded its review and announced that it intends to effectively reverse those changes. Read our briefing for more.

Since 19 March 2025, it has been possible to launch a RIF, a new form of UK unauthorised fund. The RIF is expected to be particularly attractive for investment in commercial real estate and, for the right investor base, could be an onshore rival to the Jersey Property Unit Trust.

In the main, the UK Chancellor stayed true to her promise that the Spring Statement 2025 would not contain any substantive tax measures for the UK. However, the UK Government re-committed itself to efforts to 'close the tax gap' with a broad package of measures aimed at tackling tax evasion and abusive tax avoidance activities. A summary of the measures can be found here.

Some UK businesses will now pay employer's National Insurance Contributions (NICs) on a larger section of their workforce than before. One of the stand-out announcements in the UK Chancellor's Autumn Budget was the increase in employer's NICs to 15% from 6 April. Although this was not a huge surprise, more unexpected was the cut to the threshold at which employers start to pay NICs per employee from £9,100 to £5,000 for the next tax year. To mitigate the effect of these changes, the UK Chancellor also announced an increase to the Employment Allowance (which eligible employers can use to reduce their NICs bill) from £5,000 to £10,500 and removal of the eligibility requirement of a NICs bill of below £100,000 in the previous tax year. Companies can use incentive structures to reduce their exposure to the employer's NICs rise including through salary sacrifice arrangements, providing tax-advantaged share incentives and transferring the employer's NICs on option gains to UK employees.