1. The EU rethinks its digital rulebook: simplified, softened and delayed

What's happening?

As EU-based businesses will be aware, the European Commission unveiled a digital simplification package in November 2025 proposing significant changes to the EU AI Act, the GDPR, e-privacy and cyber incident reporting rules. The aim is to simplify and soften rules that are perceived to hinder the EU's digital competitiveness and act as a brake on innovation. Proposals include postponing the compliance deadline for high-risk AI systems (currently set for August 2026), lifting AI literacy obligations for most businesses, streamlining cyber/data breach incident reporting, and a range of measures designed to make AI development and deployment easier. For more information about the proposals read our briefing on the EU's Digital Omnibus.

Our view:

These reforms appear to be a step in a more business-friendly direction, particularly for smaller businesses struggling with the tide of EU digital regulation over the last few years. However, the uncertainty, particularly in relation to AI deadlines, is not welcome. Moreover, reforms which touch on fundamental rights face significant opposition from the other European institutions and privacy lobbyists. For example, the European Commission's clarification that pseudonymised data does not constitute personal data in the hands of a recipient who does not have the keys to identification, which would smooth the path for training AI and data sharing, looks unlikely to survive the legislative process.

2. The UK's data protection reforms are largely now in force

Why it matters:

Most of the UK data protection and e-privacy reforms introduced in June 2025 by the UK Data (Use and Access) Act came into effect in February 2026. While the UK regulator has been busy issuing new guidance to reflect the new rules, it is still playing catch-up, and its guidance on some key areas of reform, such as automated decision making, is still to come. There is a little longer to prepare for the new rules on complaints (the right of individuals to complain directly to the data controller) as those provisions will only apply from 19 June 2026.

Our view:

Some changes to privacy policies, subject access request templates, internal process documents and training will be required, particularly in relation to the new complaints rules - which we explain in more detail here. Businesses are not required to significantly adapt their compliance approach to cater for the new rules. Businesses operating in the EU, looking to adopt a uniform approach to UK and EU compliance, are unlikely to benefit from the minor relaxations that are available.

3. UK Cyber Bill targets critical suppliers

Why it matters:

Against a backdrop of increasingly sophisticated cyber attacks - costing the UK economy nearly £15 billion a year - the UK Government has introduced the Cyber Security and Resilience (Network and Information Systems) Bill. Focused on protecting the systems behind essential services and the digital infrastructure that supports daily life, the Bill will expand cyber compliance obligations and regulators' enforcement powers - including for data centres, managed IT service providers, and designated “critical suppliers".

Our view: 

The EU's NIS2 Directive covers a much broader range of sectors than the UK's Bill – for example the manufacturing and food sectors are within scope for NIS2 but outside the Bill's scope. This may be seen as a missed opportunity by the UK Government, particularly given the damage and disruption caused by the attacks last year on UK businesses such as Marks and Spencer and Jaguar Land Rover.

4. UK Government reconsiders copyright and AI

What's happening?

The ongoing debate between the AI sector and the creative industries has been well documented. In short, the AI sector requires large volumes of data to train AI models, but many right holders within the creative industries do not want their work to be used for these purposes without their express permission. The UK Government has acknowledged that existing copyright laws lack clarity on this point, largely because they were drafted when AI was in its infancy. In December 2024, the UK Government opened its Copyright and AI consultation, asking for views on four possible routes towards a solution. At the time, the UK Government's preferred route was to permit AI developers to train on materials to which they have lawful access, but only to the extent that the right holders have not expressly reserved their rights. Just over 12 months on from this consultation, and in light of strong opposition from the creative industries, the UK Government has now reported that it no longer has a preferred route forward and has offered no fixed timeline for reaching its decision, stating that it must "take the time needed to get this right". 

Our view: 

It remains unclear exactly which route forward the UK Government is likely to take. The UK Government has stated that it will "continue to monitor developments in technology, litigation, international approaches, and the licensing market". Clearly then, what happens in the courts, the market and on the international stage will be key to shaping the future of this debate. This lack of clarity and continued delay remains frustrating for both the AI sector and the creative industries.

5. Dryrobe® v Caesr Group: the importance of pro-active brand strategies

Why it matters: 

In the UK case of Dryrobe Limited v Caesr Group Limited (t/a D-Robe Outdoors), Dryrobe® successfully brought trade mark infringement and passing off claims against D-Robe, but in doing so, also successfully defended a counterclaim that the "DRYROBE" trade marks should be invalidated or revoked due to genericide (i.e. where a term becomes the generic, common name for a particular product – for example "aspirin" and "escalator"). Key to Dryrobe®'s successes at trial was its pro-active brand protection strategy, which was frequently commented on in the judgment. For more information read our briefing on the Dryrobe® v Caesr Group case.

Our view: 

The diligent brand protection strategy implemented by Dryrobe® was fundamental to its successes at trial and can serve as something of a blueprint for brand-conscious businesses.

US Supreme Court rules on Trump tariffs

Why it matters:

On 20 February 2026, the US Supreme Court ruled that a wide range of tariffs imposed by President Trump in 2025 were unlawful. The ruling makes it more difficult for the US to impose tariffs more or less "at will", although it's unlikely to turn the clock back to the lower tariff environment of the pre-Trump era (indeed, Trump responded by responding an across-the-board minimum tariff of 10% under a different statute). More widely, it signals that – at least on some issues - the US Supreme Court is not prepared to defer to the Executive branch. For more detail, read What does the US Supreme Court's tariff ruling mean for exporters to the US?

Our view:

Whilst the ruling raises the prospect of refunds for some (read on for more), in the short to medium term, it creates further unwelcome uncertainty for business. For example, it's unclear whether President Trump's threat to impose an across-the-board tariff of 15% (rather than the current 10%) will be followed through. In addition, there remains a lack of clarity over the status of recently negotiated trade agreements with the US (for example, will certain goods from certain countries be exempt from the 10% tariff?). In the longer term, however, the ruling is likely to act as a constraining influence on US tariff policy – although it may be that other factors, such as the Middle East conflict and the US mid-terms, will prove equally, if not more, constraining in practice.

1. Late payment: UK to go ahead with "strongest laws in G7"

Why it matters:

The UK Government has confirmed plans to proceed with reforms that will give the UK one of the toughest late payment regimes in the world. This will include fines for persistent late payers, mandatory late payment interest of 8% above base, maximum 60 day payment terms (with some exceptions), a time limit for disputing invoices and a new low cost adjudication process for small businesses.

Our view:

Government rhetoric on reform proposals isn't always justified – but in this case, it's no exaggeration to describe these measures as "the most ambitious legislation to tackle late payments in over 25 years" and "the strongest legal framework in the G7". Our briefing explains the likely impact in more detail.

2. Beware "standard" termination clauses: lessons from the UK Court of Appeal

Why it matters:

The UK Court of Appeal's ruling in URE v Notting Hill Genesis highlights the importance of not treating termination wording in a contract as standard. What appears to be "standard" drafting may contain unexpected rights allowing one party to bring the agreement to an end and even to claim compensation. The UK ruling also looks at what happens where there is a delay in exercising a termination right. For more detail, read our briefing.

3. How to avoid making a contract before you're ready

Why it matters:

With increasing use of informal instant messaging applications such as WhatsApp for commercial dealings, staff may not always appreciate the risk of being found to have made a legally binding agreement – because they associate that with a formal, written document. However, in the UK, if an exchange over WhatsApp contains all the key ingredients you need for a contract, then a legally binding agreement will often have come into existence – even where the parties have signalled a desire to document the arrangement in a formal written contract in due course. This is exactly what happened in the recent UK Court of Appeal case of DAZN v Coupang.

Our view:

The risk for parties of being contractually bound without a more detailed, formal agreement will often be significant; for example, suppliers are likely to be exposed to unlimited liability, whilst customers may be left with a contract that fails to protect their key interests (e.g. it may allow the supplier to terminate on very short notice or offer inadequate remedies for poor performance).

ECCTA

What's happening:

Recently, core provisions have come into force under the Economic Crime and Corporate Transparency Act 2023 (ECCTA), which have practical implications and potential risks for UK corporate entities who are not up to speed with the latest new measures.

Since 18 November 2025, all newly appointed individual directors of UK companies, as well as all new individual LLP members or people with significant control (PSCs) of newly incorporated UK companies or LLPs, including those based overseas, have been required to complete identity verification (IDV). Existing individual directors, or LLP members must complete IDV by the date their company's next annual confirmation statement is due at the UK's register of companies, Companies House, after 18 November 2025—and in any event, before the end of the 12-month transition period. Existing PSCs of UK companies and LLPs will also need to complete IDV checks within the transition period (the exact timetable for compliance for PSCs is more complex). The key takeaway here is that we are currently in a transition year, during which millions of individuals are required to satisfy the IDV hurdle. 

Where IDV has not been completed, this could have implications for both corporate and loan finance transactions. For example, lenders may require additional checks and confirmations regarding a director’s IDV status. In corporate transactions, IDV compliance will need to be verified as part of the due diligence process.

ECCTA has also changed the rules on statutory registers for UK companies and LLPs. New rules introduced on 18 November 2025 mean that it is no longer a requirement to maintain a register of directors (and if applicable a register of secretaries) in-house. Instead, UK companies and LLPs should file and maintain this information at Companies House. "In scope entities" (which includes most UK companies and LLPs) should now also file and maintain their PSC information solely on the public register at Companies House. UK companies and LLPs should continue to maintain their own register of members. This places a higher burden to make sure that corporate filings are accurate and made promptly, especially as ECCTA introduces a raft of more robust penalties for filings of inaccurate information to Companies House. On loan finance transactions, a key practical implication is to consider the appropriate scope of conditions precedent (e.g. to cover PSC information, which is now only available from Companies House).

Why it matters:

Under the Companies Act 2006, failure to comply with the new IDV requirement is a criminal offence and UK Companies House has the authority to issue penalty fines. If a director signs a document in their capacity as director when they have not completed IDV, this will also be unlawful (as the legislation states they "must not act as a director of a company"). Although there is a statutory protection for third parties contracting with the company, this may nevertheless lead to concerns about corporate capacity. For instance, under the Directors Disqualification Act 1986 (as amended by ECCTA), there is the ability under the new legislation for an individual director to be removed from office if they fail to comply with IDV. This would, however, require an application to the English court. Companies House has indicated that it will initially take a tolerant approach to levying penalties on directors, with stricter measures being levied against repeat offenders, so it is unlikely that we will see any significant number of directors disqualified in the near future, especially during the transition period. However, Companies House may adopt a more robust approach to non-compliance once the transition period ends. Perhaps the more pressing point is that non-compliance by directors or LLP members with IDV requirements will render a UK company or LLP unable to file its annual confirmation statement, which itself is an offence.

Our view:

Significant uncertainties remain around key aspects of ECCTA and IDV. One such area is the new rules relating to the delivery of documents to Companies House. In time, core filings will need to be made by "presenters" or authorised corporate service providers, who are authorised to file at Companies House and have completed IDV themselves.

Another unresolved area is the application of the IDV regime to limited partnerships, corporate directors of companies, corporate members of LLPs and officers of corporate PSCs. We are still awaiting guidance and a clearer timeline on when the IDV regime will be extended to these groups.

Finally, it will be interesting to see whether the current "light touch" approach to non-compliance is maintained, or if Companies House will begin to enforce its new powers with greater vigour over time.

1. A pro-growth mandate for UK merger control

What’s happening?

The UK Competition and Markets Authority (CMA) has been conducting a widespread programme across its merger control function, largely designed to align with the UK Government's pro-growth agenda. Some reforms are already in place (including process improvements to Phase 2 merger investigations, and guidance clarifications as to how the CMA will apply its widely drawn and flexible jurisdictional tests for "material influence" and "share of supply"). Others are still in progress.

Narrowing the CMA's wide jurisdiction

As regards the scope of the CMA's jurisdiction, the UK Government recently confirmed that proposals are in motion to narrow the "material influence" and "share of supply" jurisdictional tests through legislation. In doing so, the UK Government plans to largely stipulate the factors that can be taken into account when assessing jurisdiction and thereby to increase certainty over the CMA's jurisdictional reach (albeit the proposed list of factors still retains significant flexibility as compared to other European jurisdictions).

Phase 2 decision making

Controversial proposals are afoot to reform Phase 2 decision making, by replacing the current panel of independent experts with decision-making by sub-committees appointed by the CMA Board (comprising CMA Board members, senior CMA staff and "experts" appointed by the UK Government). In doing so, the UK Government aims to enhance accountability whilst safeguarding the CMA's independence. However, the proposals raise concerns over the loss of the "fresh pair of eyes" brought by the independent panel, in particular where the standard for appeal is one of judicial review. It also remains to be seen how parties will view the proposed model in terms of their access to the decision makers, balanced against the aim of increased speed and efficiency.

An increased role for UK Government

Also relevant to the theme of independence, the UK Government is planning to provide the Secretary of State with a new, formal role in a wider range of key guidance documents, for example to require their consultation or approval.

A more flexible approach to remedies

Last but not least, we have seen material shifts in the CMA's stated approach to merger remedies. Whilst the core principles remain broadly the same, the UK Government aims to provide more time for remedies to be agreed at Phase 1. Recently revised remedies guidance also seeks to introduce more flexibility (for the CMA to clear deals subject to behavioural solutions and more complex structural solutions) and to enable the CMA to act with greater speed. In terms of the practical benefits for business, the CMA's recent case practice already signals, to some extent, its willingness to take a more innovative approach to remedies discussions in seeking to support the UK Government's pro-growth agenda. Whilst the revised guidance should be useful in facilitating merger remedies processes in cross-border deals (for example by bringing the UK and EU into closer alignment) any differences that emerge from the ongoing application of each jurisdiction's rules (for example as to the role of efficiencies in remedies assessments) should be closely followed.

2. UK overhaul of the National Security and Investment Act on the horizon

What's happening?

Long-awaited reforms to the UK's National Security and Investment Act (NSIA) are expected later this year, in the form of updates to the scope of the sensitive sectors subject to mandatory notification – the aim of which is to provide greater clarity (and in some circumstances limit) which activities are caught. These reforms are also likely to include exemptions from the notification requirements for certain internal reorganisations and the appointment of all insolvency practitioners (currently this is limited to administrators).

Why it matters:

Whilst not yet final or in force, the changes (when they come) will be the latest in a line of reforms announced by UK Government over the past year, with the aim of aligning the NSIA regime with the UK Government's pro-growth agenda. By aiming to streamline the UK's investment screening process and reduce regulatory burden on businesses, the UK Government intends to create a more efficient and predictable system that encourages investment in critical sectors without compromising the UK's national security.

Our view:

Although these changes have been expected for a while, they are unlikely to be the end of the story for NSIA reform. Indeed, a recent government committee report touches on further proposed reforms, again with economic security at their heart. In short, the report recommends that the UK Government:

• Explores ways of amending the NSIA to enable information relating to investment screening decisions to be shared with UK Parliament; and
• Develops an accreditation scheme for providers of trusted capital (similar to models currently used in the United States). The purpose would be to create a marketplace of accredited investors to facilitate investment into strategic sectors.

Whilst it remains to be seen whether the UK Government will act on these proposed future reforms, it is evident that there remains an appetite to further tailor the NSIA regime, and to reduce the burden on certain types of investors. For more, read Reform of the UK NSI Act: tightening security on key sectors and ensuring predictability | Travers Smith.

3. A new era of national security and FDI scrutiny

What's happening?

Continuing geopolitical shifts are also providing the backdrop for a hardening of foreign direct investment (FDI) and national security regimes. Across the UK and EU, we have seen regulators move beyond a "watchlist" approach (e.g. viewing sales to Russia or China in strategic sectors with immediate caution and a presumption for remedial action or in some cases prohibition) towards a universal scrutiny model where even the most friendly cross-border capital may be viewed through the lens of sovereign resilience. We discuss the latest developments here.

Our view:

Whilst we do not expect dramatic changes in approach, the direction of travel is clear: outright FDI and UK National Security and Investment Act clearance cannot simply be expected, even where deals do not involve parties based in or linked to potentially 'hostile' countries. As governments prioritise resilience and seek to protect against the risk of vulnerability to leverage by other states, the focus on scrutinising all types of buyers has sharpened. Furthermore, even where a block is unlikely, if the target is active in a sensitive/critical sector then behavioural remedies (such as maintaining a headquarters or manufacturing in a high-cost jurisdiction) can materially impact the post-completion position.

4. ESG initiatives and antitrust: a cross-jurisdictional snapshot

As ESG goals and pro-growth initiatives remain high on governments' agendas, it is no surprise that regulators are having to examine competition law's interaction with the green transition. In this briefing we discuss the key approaches to ESG collaborations from four key competition regulators: in the EU, UK, Japan and the US.

Whilst navigating this complex and fast-paced regulatory landscape presents significant challenges for businesses operating across multiple jurisdictions, our team highlights some areas of helpful alignment and tips for risk mitigation that businesses and their advisers can take. 

1. UK's tough new consumer protection regime

Why it matters:

After a relatively slow start, the UK Competition and Markets Authority (CMA) is now building up a head of steam on consumer enforcement – with 14 business-to-consumer (B2C) investigations underway using the much tougher powers that it acquired in April 2025. It has already used those powers to fine one business over £470,000 (for failure to respond to an information notice) and has written to over 100 businesses drawing attention to potential breaches of UK consumer law. We recently saw the opening of an investigation into Adobe's use of early cancellation fees for software products. Meanwhile in November 2025, the CMA launched formal investigations into eight businesses over a variety of practices relating to alleged misleading pricing.

Our view:

The new consumer law enforcement regime introduced by the UK Digital Markets, Competition and Consumers Act 2024 (DMCCA) in April 2025 has significantly increased the risk for B2C businesses of failing to comply. Whilst the UK CMA's initial "measured" approach may have lulled some into a false security, there is now no doubt that the regulator means business. The key difference compared with the pre-DMCCA position is that a finding of infringement is likely to have a significant financial impact – not just through fines but also through redress orders, requiring e.g. compensation to be paid to consumers.

2. Consumer subscription contracts: what, when and why?

Why it matters:

Complex new rules governing consumer subscription contracts in the UK are expected to come into force in Autumn 2026. These are designed to ensure consumers are given clearer information when they first sign up, benefit from a cooling-off period and get periodic reminders before subscriptions are due to renew. Failure to comply carries a number of risks, including the prospect of substantial fines from the UK CMA (see above). For more detail, read The UK's new subscription contracts regime: what, when and why?

Our view:

Although we are still awaiting some detail of how the regime will operate, businesses need to start preparing now – for example, some changes may require modifications to CRM systems that will take time to implement. Although there are still areas of uncertainty, the legislation and the UK Government's consultation on the detail provide enough of a steer to enable meaningful planning to take place now. 

Transparency pilot in the UK Commercial Court and Financial List

What’s happening:

A new transparency pilot commenced in January 2026 in some of the courts of England and Wales. In short, following hearings within those courts, significantly more documents will now be publicly available from the English court website, including witness statements, expert reports and skeleton arguments. This pilot is aimed at improving accessibility to these documents for the public by removing the need to contact (or make an application to) the court. All new and existing cases are caught by the pilot (although it is possible to apply for exemptions), and it applies to certain documents deployed at public hearings which take place in the UK Commercial Court and the London Circuit Commercial Court of the King's Bench Division, and the Financial List (Commercial Court and Chancery Division).

Why it matters:

• Public scrutiny of disputes - Commencing litigation in these courts will open parties up to considerably more scrutiny by the public and the media, requiring strategic consideration at the early stages of any dispute.
• Easier monitoring of key cases - Interested parties who wish to monitor cases that may impact their business and seek relevant documents for other purposes will now be able to do so with increased ease.

1. Unfair dismissal 

Why it matters:

From 1 January 2027, the qualifying service period for unfair dismissal protection in the UK will reduce from two years to six months. This means that all current employees in the UK, as well as new recruits starting between now and 1 July 2026, will immediately have unfair dismissal protection from 1 January 2027. Also from 1 January 2027, the unfair dismissal compensation cap (currently the lower of a year's pay and £118,223) will be removed, allowing employees to claim unlimited compensation for financial loss. 

Our view:

These changes will almost certainly result in an increase in Employment Tribunal claims in the UK, both from employees who would not previously have had enough service and also from high earners for whom an unfair dismissal claim may not have been worthwhile under the current capped compensation regime. Settling unfair dismissal claims and negotiating senior exits are likely to become more difficult. Effective operation of probationary periods, as well as proactive performance management on an ongoing basis, will become even more important.

2. Harassment and NDAs

Why it matters:

UK employers have been required since October 2024, to take reasonable steps to prevent sexual harassment of employees, including by third parties such as suppliers. In October 2026 employers will become liable for harassment of any kind (including harassment relating to gender, race, disability and religion/belief) of staff by third parties, unless they take reasonable steps to prevent it. In addition, employers will be unable to use confidentiality clauses to stop employees disclosing information about harassment or discrimination, except in certain circumstances (the detail of which is awaited). 

Our view:

This extension of employer liability for harassment will require employers to assess the risks of third-party harassment in their workplace and implement measures to reduce the risk (such as updating third party contracts). The new confidentiality restrictions may make settlement agreements less attractive if the parties cannot be sure that the details will remain private. Or it may be that employers move away from including confidentiality provisions in settlement agreements (as some employers already are). Either way, it is more likely that harassment allegations could become public, which highlights the importance of having a thorough and transparent investigation process for these matters.

3. Pay transparency

Why it matters:

Large employers (with 250 more employees) are required to report gender pay gap figures annually, and from April 2027, they will have to publish an action plan to tackle the gap (with a transitional ‘voluntary’ year in 2026). Large employers will also be required to report annually on the disability and ethnicity pay gaps in their workforce (from a date yet to be confirmed). 

The EU has followed suit and is introducing gender pay gap disclosures for larger employers in 2026 (extending to employers with 100 or more employees by 2031). If a business’ gender pay gap is greater than 5%, then a pay audit will be required. Employers will have also to provide certain pay information to their workforce and to job applicants.

Our view:

Although disability and ethnicity pay reporting is not expected to come into force before 2027, there is inherent complexity in the practicalities of collecting this data and holding it in compliance with data protection rules, so it will need some advance thinking. UK employers with EU operations may be affected by the EU pay reporting and transparency rules. In addition, many UK employers are choosing to implement pay transparency measures as a matter of good practice (even if not covered by the EU changes).

1. Data centres in the UK: meeting the challenge

Why it matters:

With AI turbo-charging demand, strong UK Government support and the recent announcement of £38 billion in investment by the likes of Google, Microsoft, Nvidia and Blackrock, there's little doubt that data centres represent a major opportunity for investors in and operators of UK infrastructure. But there are challenges in terms of suitable sites, planning consent, power supply, financing and the environmental impact.

Our view:

• Planning consent: amendments to the UK National Planning Policy Framework and designation of data centres as Critical National Infrastructure in the UK have made it easier to obtain consent, resulting in a raft of recent approvals.
• Power supply: data centres are notoriously power hungry but the UK Government is taking action to address this problem, such as improving the grid connection process.
• Environmental impact: concerns over power consumption, water use, heat and noise are legitimate but can often be mitigated (for example, excess heat can be directed into heat networks to provide low carbon heating and hot water for nearby homes and offices). 

2. The new UK heat networks regime: what do regulated businesses need to do and when?

Why it matters:

Operators of heat networks and in some cases, landlords of buildings served by heat networks, face a new regulatory regime in the UK which came into effect on 27 January 2026.

Our view:

Heat networks haven't been regulated before, so this is a significant change – and getting it wrong could lead to sanctions from the energy regulator, Ofgem. Although the regime is being phased in gradually, regulated businesses need to start preparing now.

3. The UK National Underground Asset Register: what does it mean for the energy and infrastructure sector in the UK?

Why it matters:

The UK National Underground Asset Register (NUAR) comprises a digital map of underground infrastructure in the UK - which is essential information for any business involved in laying cabling or piping. At present, accessing that information is cumbersome and time-consuming – so in that respect, the NUAR should be transformative. To make it work, owners of assets will be required to upload information on underground apparatus to NUAR – a process which could be quite onerous for some asset owners.

Our view:

Whilst NUAR is a welcome development, asset owners need to be aware of the upload obligations.

4. The UK Warm Homes Plan: what does it say?

Why it matters:

In January 2026, the UK Government published its Warm Homes Plan, setting out its vision for the transition to low carbon heating of residential property in the UK. It is 150 pages long – but we've read it, so you don't have to.

Our view:

It's a wide-ranging document so the relevance to your business will depend what you do, but our briefing covers the implications for:

• New build properties
• Heat networks
• Private rented property
• Finance to support the clean energy transition
• Heat pumps
• Consumer protection
• Hydrogen and biomethane

For more on what the Plan means for investors and lenders into UK residential real estate, go to Section 12.

PISCES (Private Intermittent Securities and Capital Exchange System), a new type of regulated trading platform for the UK: auctions commence

Why it matters:

As previously reported, the Private Intermittent Securities and Exchange System (PISCES) is 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. It provides 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.

The legal and regulatory infrastructure to allow for the trading of shares in the PISCES sandbox is in place. Two PISCES operators have so far been approved by the Financial Conduct Authority to operate PISCES auctions in the PISCES sandbox. The two operators are the London Stock Exchange, which trades under the name 'Private Securities Market' and JP Jenkins, which trades under the name 'JP Jenkins Private Market'.

The more interesting news on PISCES is both the Private Securities Market and JP Jenkins Private Market have announced that each of them is embarking on an auction of shares to be traded in the PISCES sandbox.

In the case of the Private Securities Market auction, the shares being offered for auction are in a Luxembourg Tradable Private Equity Investment Company or TPEIC, known as TPE Investment Company SA (TPE). A TPEIC is a Luxembourg company with segregated investment compartments; each compartment will acquire and hold a single equity investment in a late-stage unlisted company. The announcement says that TPE holds around 10% in Oxford Science Enterprises plc, the University of Oxford's scientific spinout holding company.

The transaction through the JP Jenkins Private Market is more straightforward. It involves the offer of shares in a board-games development company known as QPLAY. QPLAY develops hybrid physical and digital board games.

Our view:

These two announcements are welcome news for the UK capital markets. They go in some way to endorse the PISCES model as an alternative method for shareholders in private companies to realise the value in their illiquid investments. Further, the Private Securities Market auction involves the innovative use of PISCES. It is designed to allow investors to participate in a wider range of investments and to spread their investment risk. It will be interesting to see whether this structure will become the norm on PISCES or whether more single investment companies, like the JP Jenkins Private Market auction, will be the majority of PISCES companies.

Although it is early days for PISCES, it is encouraging to see that companies and investors are interested in considering PISCES as an investment model.

1. Pension contributions made via salary sacrifice

Why it matters:

At the UK Autumn Budget 2025, the UK Chancellor confirmed that National Insurance contributions (NIC) tax relief on pension contributions made through salary sacrifice will be capped from April 2029. Salary sacrificed pension contributions above £2,000 will be subject to employer and employee NICs, like other employee pension contributions. With employer NICs now standing at 15%, this will increase costs for those businesses who use salary sacrifice for pension contributions, particularly where employers currently share their NIC saving with employees. 

Our view:

The UK Government's primary legislation introducing this change has met opposition in the UK House of Lords. Much of the detail will be contained in regulations which have yet to be published. However, from what we know so far, it appears that any agreement under which an employee has a choice between cash and pension contributions will be caught, meaning that flexible benefit and cash allowance packages will be impacted as well as traditional salary sacrifice agreements. The proposal will particularly impact mid to high earners. There will likely be some behavioural change from both employers and employees. UK employers may look elsewhere to offset the increased costs, whether that be through limiting pay rises, reduced recruitment or lower levels of business investment. Employees may reduce their pension savings to increase take home pay. Significantly, the change further risks member confidence in pensions savings, at a time when we have an ongoing Pensions Commission review into pensions adequacy.

2. Releasing surplus in defined benefit pension schemes

Why it matters:

Improved funding levels in recent years has meant that many defined benefit (DB) pension schemes are now in surplus. The UK Pension Schemes Bill contains provisions to make it easier for employers to access surplus from an ongoing DB scheme, which are expected to come into force by late 2027. This will likely include the potential for UK employers to have surplus returned to them from schemes that are fully funded on a low dependency funding basis, which is a lower funding basis than the current buy-out basis offering employers greater opportunities to access any trapped cash. 

Our view: 

We welcome the additional flexibility and choice that will be available to UK employers once these changes come into force. Regulations detailing the conditions that must be met before surplus can be released to employers are yet to be published and will be subject to consultation. The UK Pensions Regulator is already encouraging scheme trustees to develop and agree a surplus sharing framework with employers. Options currently available to access surplus including using it to fund future employer pension contributions, transferring it to another scheme (including to commercial master trusts) and augmenting (or not augmenting) member benefits.

3. Pension scheme investment in private markets

Why it matters:

Included in the UK Pension Schemes Bill is a reserve power effectively to force £25bn+ master trust and Group Personal Pension funds to invest a proportion of their assets in particular asset classes, including in the UK. The power is highly controversial as evidenced by its turbulent passage through the UK Parliament. The Bill currently says that qualifying assets "may for example be" private equity, private debt, venture capital or interests in land but excludes investment in such assets through listed investment companies. The drafting seems fundamentally misguided and, if it remains in the Bill, industry groups are campaigning to have it amended to allow schemes to use a range of vehicles, including listed investment companies, to fulfil the mandation requirement. In the absence of such an amendment, there is a risk that pension trustees may move away from investing in such vehicles to meet their Mansion House commitments.

Our view: 

There appears to be a fundamentally confused division in the current drafting between the concept of "private markets" and the concept of "listed liquid assets" despite the fact that you can access the former through the latter. As raised in the UK House of Lords debate, what the UK Government is doing is difficult to justify by permitting (for these purposes) access to the same types of assets through certain fund structures (e.g. LTAFs) and not others (e.g. listed investment trusts). This arbitrary distinction between the use of listed and unlisted vehicles for investments in the same types of assets is unhelpful as there may be good reasons why pension arrangements would prefer to invest via a listed fund (not least if liquidity is an issue). We hope the UK Government will respond to calls for amendments.

1. Transparency in the UK real estate sector

What's happening?

As part of the development of the register of contractual controls (under the aegis of the UK Levelling Up and Regeneration Act 2023), the draft UK Provision of Information (Contractual Control) (Registered Land) Regulations 2026 were published on 9th March 2026. The UK Government also published a response to the relevant consultation that took place in 2024, and a new set of guidance notes about the regime.

Under the new regime, the grantee of a contractual control right (such as options, conditional contracts, pre-emption rights, or promotion agreements) must submit certain information about it to UK HM Land Registry. There are some exemptions, such as rights granted as security for a loan or an obligation to pay overage, rights affecting leases with less than 15 years left, rights that are not held for development purposes, and rights granted for less than 18 months.

The Regulations will come into force on 6 April 2027. Anyone who is granted the benefit of a contractual control right after the date on which the Regulations are laid but before 6 April 2027 must submit the required information by 6 October 2027. If a right is granted, changed, or assigned after 6 April 2027, information must be provided within 60 calendar days.

From April 2028 onwards, UK HM Land Registry will begin publishing core information submitted under the Regulations, such as the location and extent of land affected, the identity of the grantee, the type and duration of the control right, and the date of grant or exercise.

Why it matters?

Failing to comply with these Regulations, or knowingly or recklessly providing false or misleading information in response to those requirements, constitutes an offence under section 225 of the Levelling-up and Regeneration Act 2023. It will also not be possible to register a notice or restriction at UK HM Land Registry in respect of rights which have not been registered on the new register, although the exact mechanism will not be known until UK HM Land Registry's own technical guidance is provided.

Our view:

The new regime represents yet another set of regulations impacting on the UK real estate sector and, as the submissions must be made by a conveyancer, yet another cost for business.

Some of the respondents to the consultation explained that the greater transparency could create pressure from development-averse communities on landowners, and that developers might adapt their behaviour by entering into different types of agreements or opting to purchase land outright stead of using contractual controls.

The register creates a duty to register control rights, their variation, exercise and their expiry. There is a concern that although conveyancers may well be involved in the initial grant of such a right, they might not be involved in any variation of the rights and will almost certainly not be instructed in relation to their expiry.

2. UK Renters' Rights Act 2025

Why it matters:

The UK Renters' Rights Act 2025 represents a seismic shift in the UK residential lettings sector. The UK Government has published a roadmap showing the intended timing for implementation of the various aspects of the new regime, starting on 1 May 2026 with the abolition of section 21 'no fault' evictions, the introduction of Assured Periodic Tenancies instead of Assured Shorthold Tenancies, limits on rent increases and more rights for tenants to keep pets.

From 1 May 2026, landlords in the UK private rented sector will need to provide their tenants with an Information Sheet (for existing tenancies) or a Written Statement (for new tenancies) within a specific timeframe. The UK Government has published new regulations which set out what information will need to be provided to tenants, along with a guidance note.

Our view:

Whilst the sector is somewhat relieved that the details of the new rules are at last known, uncertainty remains. The main fear on the part of UK real estate investors and their lenders is that the English courts will not have capacity to deal with the section 8 eviction processes and the rent review disputes that will follow from the introduction of the new regime.

3. The UK Warm Homes Plan, EPC reform and Minimum Energy Efficiency Standards (MEES)

Why it matters:

As discussed in Section 9 , the UK Warm Homes Plan, published in January 2026, confirms the trajectory that has been trailed (but not decisively settled) for several years: from 2030, it will not be possible to let out UK residential properties in the private rented sector if they have an Energy Performance Certificate (EPC) rating D,E or F, unless they have registered a valid exemption. EPCs themselves will be reformed, but in a recent announcement the UK Government has confirmed that this change will be pushed back to the second half of 2027 (from October 2026).

Our view:

Investors and lenders into UK residential real estate can now make plans to be compliant by 2030. Investors and lenders into UK commercial real estate are still asking the UK Government for confirmation about what they can expect by way of MEES updates.

4. The rejuvenation of commonhold in the UK

Why it matters:

On 27 January 2026, the UK Government published draft legislation to revolutionise the way in which flats are owned and managed in England and Wales. The headline provisions include: capping ground rents payable under existing long leases at £250 per annum, abolishing forfeiture for long residential leases, banning leasehold for new flats and mandating commonhold tenure for new flats instead, and continuing to implement the leasehold reforms contained in the UK Leasehold and Freehold Reform Act 2024.

Our view: 

This Act contains some very controversial proposals. Many freeholders, including large UK pension funds, are pointing out to UK Government that capping ground rents on existing leases is both unfair (in wiping up to £18.7 billion from ground rent investment values, according to a report commissioned by the Residential Freehold Association) and destabilising (by retrospectively changing contracts that were freely entered into by legally-represented parties).

The proposed ban on leasehold flats to mandate the introduction of commonhold has received a mixed response. Whilst the UK real estate sector is generally supportive of this move, they have warned UK Government that leasehold flats are likely to be devalued as a result, that there is likely to be a slowdown in housing delivery in the run-up to the implementation of the ban, and that (contrary to much media speculation) there is no guarantee that service charges will be any cheaper for owners of commonhold flats than leasehold flats.

1. EU Sustainability Omnibus enters into force

What's happening? 

As EU-based businesses will be aware, on 26 February 2026, the Sustainability Omnibus package simplifying sustainability reporting and due diligence rules was published in Official Journal of the EU, and entered into force on 18 March 2026. 

The thresholds for reporting under the Corporate Sustainability Reporting Directive (CSRD) have been raised considerably, taking many companies who expected to have to report out of scope entirely. EU companies and groups are now in scope if they have at least 1000 employees and a net annual turnover of €450m. The non-EU parent companies of groups will need to report if they have at least €450m of EU turnover and either an EU branch or an EU subsidiary with at least €200m of turnover. There is a new exemption for financial holding companies, but the strict boundaries of this mean that its application will need to be considered carefully on a case-by-case basis. 

The scope of the Corporate Sustainability Due Diligence Directive – which were already significantly higher than CSRD – have also been increased and will now capture only the very largest companies. EU companies and groups with more than 5000 employees and €1.5bn of turnover, and non-EU companies and groups with more than €1.5bn of EU derived turnover will be caught.

Separately, in December 2025, EFRAG submitted revised and simplified drafts of the ESRS to the European Commission. The drafts would dramatically reduce the number of datapoints to be reported under the CSRD by 68%, with all optional datapoints deleted. The Commission will now prepare the Delegated Act revising the existing set of ESRS based on EFRAG’s technical advice, expected by mid-2026. Given that the first ESRS were quite significantly revised by the Commission before being adopted, further changes are still possible. 

Why it matters:

Previously, during the "limbo period", businesses faced a number of challenges; they technically remained under a legal obligation which they knew would be at least amended and potentially eliminated in the short term. This limbo has now (for the most part) ended, with new thresholds and compliance deadlines finalised. Member States have 12 months to transpose the provisions into their own national law before they can become effective.

2. UK Sustainability Reporting Standards published

What's happening? 

On 25 February 2026, the UK Government released its long-awaited Sustainability Reporting Standards (UK SRS). The finalised UK SRS are based on IFRS standards S1 and S2 with some minor amendments. Businesses can now voluntarily report against these standards, but some uncertainty remains as the UK Government decides which private companies will be legally required to comply. 

A key change in the final UK SRS is the indefinite option to report only on climate-related issues, instead of full sustainability disclosures, which marks a change from the ISSB's approach of requiring both disclosures, with climate-first for only a limited period. There are very few other changes between the ISSB's original standards the UK SRS, which is helpful for companies facing multiple disclosure requirements across jurisdictions using ISSB as their sustainability reporting baseline.

The UK Department for Business and Trade (DBT) said that it would consult on the introduction of mandatory reporting for "economically significant companies" once the standards were endorsed. While we still expect that to happen, it may not be immediate as it is part of a wider review of corporate reporting, including the benefits of non-financial reporting and the multitude of thresholds which apply. 

While an assurance framework is in the works, the UK SRS do not envisage any mandatory assurance. Whether audit of sustainability information is required will ultimately be determined by legal rules mandating reporting under the SRS. 

Why it matters:

With the publication of the UK SRS, businesses can now choose to voluntarily disclose against them, though many will wait for the UK Government to decide which entities will be legally required to use the UK SRS for sustainability reporting. UK listed companies already know that the UK's Financial Conduct Authority (FCA) is planning to introduce mandatory reporting for financial years beginning 1 January 2027 or later. 

3. UK FCA Consultation on sustainability disclosures for listed companies

What's happening?

On 30 January 2026, the UK's Financial Conduct Authority (FCA) launched a consultation on the introduction of mandatory sustainability reporting for listed companies, based on the UK SRS. The consultation will be of high interest to any UK listed company – including overseas companies with a UK listing. Exclusions from the scope of the new rules will align with exclusions from TCFD reporting, namely closed-ended investment funds, shell companies, and debt and debt-like securities. 

The FCA is proposing to amend the Listing Rules to remove references to TCFD, and instead require listed companies to disclose against S2. There is a standalone requirement to disclose whether companies have a transition plan, in addition to the S2 requirements on transition plans. S2 requires that the company disclose information about any climate-related transition plan that it has, including key assumptions in its development and dependencies on which it relies. 

Disclosure of scope 3 emissions will not be mandatory (as per the SRS S2) but will be optional in year 1 and on a comply or explain basis in years 2 onwards. This provides companies with more flexibility but potentially raises questions over the UK’s positioning on climate, given many companies subject to mandatory climate-related risk reporting have spent the last few years developing an approach which would allow them to make sufficiently reliable scope 3 disclosures.

Similarly, all SRS S1 general sustainability disclosures will be on a comply or explain basis from year 3 onwards (optional in the first two years of reporting) – investor expectations and market practice will likely determine whether compliance or explanation becomes the norm.

Why it matters:

Listed companies are quite accustomed to reporting on climate-related financial risks and opportunities, given that the UK was the first country to introduce mandatory reporting in line with the TCFD framework (for premium listed companies, initially, in 2021). The ISSB's S2 climate standard is very similar to TCFD in many respects, with some notable differences including mandatory disclosure of scope 3 emissions in all cases (subject to transitional relief and comply or explain as above), rather than "if appropriate" as per TCFD, and the disclosure of industry-based metrics relevant to a company's business model. Overall, listed companies accustomed to disclosing under TCFD should find it reasonably straightforward to shift to S2 disclosures, though a gap analysis would be a helpful exercise. S1 reporting will require a deeper understanding of the broad sustainability-related risks and opportunities relevant for the company and of interest to investors.

3. New developments for the UK and EU CBAM

2026 also brings new developments relating to the UK and EU Carbon Border Adjustment Mechanisms (CBAM).

In the UK, the Finance Bill 2025-26 includes draft primary legislation for CBAM, with the UK HMRC sharing draft secondary legislation for consultation on 10 February 2026. The draft secondary legislation covers the legislative requirements associated with the administration of the CBAM charge, including matters such as registration, returns, reimbursement arrangements, weight of CBAM goods, and record keeping.

In the EU, the definitive (i.e. payment) phase of the CBAM began on 1 January 2026, although the changes made by the Omnibus simplification package will remove many importers from its scope. On 16 December 2025, the European Commission published a comprehensive legislative package relating to the definitive period. The European Commission is proposing to extend the scope of the CBAM to include specific steel- and aluminium-intensive downstream products, in addition to introducing additional anti-circumvention measures and a Temporary Decarbonisation Fund to support EU producers of CBAM goods and mitigate carbon leakage risks. The proposal also clarifies the use of default values, the calculation and publication of emissions and the price of CBAM certificates and the free allocation adjustment.

Why it matters:

As the EU CBAM moves into the definitive phase, in-scope businesses must be prepared for the immediate cashflow impacts from the purchasing of CBAM certificates. The EU’s proposed scope expansion to specific steel- and aluminium‑intensive downstream products, plus tougher anti‑circumvention rules, could capture importers previously outside the scope of the regime. On the other hand, the UK CBAM regime is crystallising: draft primary and secondary legislation set out concrete obligations (registration, returns, product weights, reimbursement, and record‑keeping), meaning systems and data processes must be built now to avoid compliance gaps.

4. UK PFAS Plan published

What is it?

On 3 February 2026, the UK Government published its first ever Plan to tackle per- and poly-fluoroalkyl substances (PFAS), commonly known as 'forever chemicals'. The plan sets out a range of further measures and interventions, which includes:

• Developing new guidance for regulators and industries to address legacy PFAS pollution on contaminated land,
• Consulting on the introduction of a statutory limit for PFAS in England’s public water supply regulations,
• Carrying out tests on food packaging to trace the presence of PFAS and support future regulatory action,
• Introducing new guidance for regulators and site operators on how to improve their handling, monitoring and disposal of PFAS, and
• Completing work to consider restrictions on the use of PFAS in firefighting foams. 

Why it matters:

The UK PFAS Plan signals a step‑change in PFAS regulation and enforcement in the UK. The Plan does not in itself propose any new legislation – however, a public consultation on the restriction of PFAS in firefighting foams was open until 18 February 2026, and the UK Government is considering introducing further restrictions on PFAS including the addition of more PFAS substances to the UK REACH candidate list of substances of very high concern (SVHCs).

5. Energy efficiency in the EU

Many companies operating in the UK will be familiar with the long-standing requirement for certain businesses to conduct an energy audit every four years, implemented in the UK as the Energy Savings Opportunity Scheme (ESOS). Though UK ESOS continues (and a new scoping deadline looms at the end of 2026), the EU has recently updated the Energy Efficiency Directive and with it the scoping boundaries for the obligation to conduct an energy audit.

Whereas the previous Energy Efficiency Directive determined scope of the requirement based on the size of the company (or partnership, or other entity), the new rules are based on energy consumption over the last three years. Businesses with 10 TJ (approximately 2.8 GWh) of annual consumption will now be required to carry out an audit, regardless of the size of their organisation in financial terms or headcount.

The rules also require in-scope entities to prepare an energy efficiency action plan, laying down how they will act on energy audit recommendations to improve their energy efficiency over time. 

The Directive sets a deadline for the first audit of October 2026, but at the time of writing, only a handful of member states have laws in place to meet this deadline. Many more have laws in draft, and are likely to provide for an extended deadline. 

Why it matters:

Past assumptions around scope no longer hold – even small companies with decent sized office premises can be caught by the new obligation. The requirement is primarily about reporting, but the follow on obligation to prepare an energy efficiency action plan may involve some business changes and potentially cost.

1. VAT: Restriction on recovery of input tax on transaction costs

Why it matters:

The UK Supreme Court delivered its judgment in the Hotel La Tour Ltd case, unanimously upholding the UK HMRC's restrictive approach to the recovery of input VAT charged on professional fees incurred in connection with the sale of shares. The judgment confirms that any professional fees incurred on share sales that are 'directly and immediately' linked to a share sale will not be eligible for input VAT recovery—even if the sale proceeds are used to fund taxable activities elsewhere in the business.

Our view:

This judgment is relevant to all UK businesses considering a sale of shares—particularly those who (like the appellant company in the case) seek to finance other taxable business activities using the proceeds from the disposal. Recovery of VAT will always depend on the facts and circumstances of any given case, but the decision provides some clarity for a complex area of law.

The basic rule is that input VAT can only be recovered on services that relate to taxable supplies. When professional fees are incurred specifically for a share sale (an exempt supply), they will fall outside the scope of recoverable VAT, irrespective of any wider business purpose. Although different rules apply to share sales involving non-UK buyers (where the supply may be treated as 'out-of-scope' for VAT purposes), the UK Supreme Court's judgment should help businesses budget for transaction costs and VAT liabilities in their M&A activities.

Read more in VAT recovery on deal costs restricted | Travers Smith.

2. Cross-border: UK HMRC concession relating to withholding tax errors 'on pause' 

Why it matters:

The UK HMRC has suspended a concession that allowed UK borrowers who, in error, had failed to withhold UK tax on interest paid to overseas lenders (where those overseas lenders were entitled to claim double tax treaty relief in respect of the tax withheld) to settle their tax exposure by paying late-payment interest only. In the absence of the concession, the normal rules apply such that the full amount of the tax, plus the late-payment interest, will be assessed by HMRC (irrespective of the lender’s entitlement to DTA relief).

Our view:

The withdrawal of the concession means following any procedural formalities to ensure interest can be paid gross under a cross-border loan is now even more important. For example, borrowers and lenders will need to make sure they follow the Double Tax Treaty Passport (DTTP) Scheme to the letter when applying for confirmation to pay gross and watch out for any 'trip hazards' such as filing new borrower DTTP2 forms when there is an upsizing or change of Lender. Any tax (and interest) exposure should be investigated and identified as a risk in tax due diligence for M&A transactions involving entities engaged in cross-border lending.

The precise reason for the withdrawal of the concession is unknown, but HMRC state that they are conducting a review of their processes for dealing with applications for relief from withholding tax under a double tax treaty. The concession is paused until further notice and there is no published timetable for the completion of the review.

Read more in Withholding the withholding tax concession | Travers Smith.

3. Whistleblowing: New Strengthened Reward Scheme introduced in the UK

What is it?

On 26 November 2025, the UK HMRC launched the Strengthened Reward Scheme to incentivise individuals to report serious tax avoidance or evasion involving large corporates, wealthy individuals, or offshore avoidance schemes. Where information directly leads to HMRC recovering more than £1.5 million in tax, eligible informants may qualify for a reward of between 15% and 30% of the additional tax collected. The scheme is modelled on a similar scheme in the United States. 

Our view:

The new scheme significantly emphasises the importance of transparency in tax in the UK. The size of the reward available creates a tangible incentive for individuals with relevant information to express concerns with HMRC directly (rather than raising them internally) even where allegations may later prove incomplete or mistaken. The new scheme sits alongside the 'failure to prevent the facilitation of tax evasion' corporate criminal offence, in force since 2017. The introduction of the scheme provides businesses with an opportunity to revisit internal training and governance controls in this area.

It is likely that disclosures under the new scheme will trigger closer HMRC scrutiny of businesses, adjustments to risk profiles under the Business Risk Review process, and enquiries. There are associated operational and reputational risks for businesses when navigating that heightened scrutiny, both internally and externally. 

For more, read HMRC guidance Reporting serious tax avoidance or evasion.

4. Mandatory Tax Advisor Registration: New regime for businesses interacting with UK HMRC

From 18 May 2026, new UK rules will preclude a tax adviser from interacting with HMRC on behalf of a client unless they register with HMRC. The rules will apply to international tax lawyers and accountants outside the UK that wish to communicate directly with HMRC in respect of their clients' tax affairs. Only limited exceptions (e.g., providing free tax advice or 'in-house' tax advice) apply. HMRC have, however, agreed to pause the implementation of the regime as far as it impacts financial services businesses until the end of March 2027. 

Registration and adviser interaction will be monitored with HMRC empowered to demand information, refuse registration, 'name and shame', and impose fines (rising to £10,000 for repeated contravention) for non-compliance. 

Our view:

The new regime has broad affect. A tax adviser is any organisation (whether based in the UK or overseas) who, as any part of its business, assists other persons (i.e., clients) with their tax affairs, and gets paid for it. Interaction covers any type of correspondence or communication with HMRC, including the filing of any return, claim, notice or any other document. 

The rules require tax adviser organisations to provide basic identification information, the name of each 'relevant individual' (broadly, individuals who play a significant role in the organisation’s tax adviser activities) and up to five 'officers', together with a statement that both the organisation and the relevant individuals satisfy certain conditions. These conditions include confirmation that minimum standards (including in respect of tax compliance, solvency, and the absence of criminal conviction) are met. 

For more, see HMRC's guidance:

• Check if and when you need to register as a tax adviser with HMRC, and
• Check if you meet HMRC's conditions to register as a tax adviser

5. New UK carried interest tax regime from 6 April: legislation enacted

The Finance Act 2026 was enacted on 18 March. It includes the provisions implementing the UK's new regime under which, from 6 April this year, all carried interest will be taxed as trading income. A bespoke effective rate of around 34.1% will apply provided the carried interest derives from a fund that has a weighted-average holding period (AHP) for its assets of at least 40 months. 

The new regime potentially applies to non-residents (broadly, if they work in the UK at any time during the period over which the carried interest accrues) but, helpfully, contains limitations on its scope in relation to them. 

Our view:

Aside from giving the UK the highest effective rate of carried interest tax amongst mainstream EU jurisdictions, the reforms are likely to generate complex international issues. 

In addition, as carried interest will be taxed as trading profit, it will fall within the UK’s payment on account (POA) rules, under which self-employed individuals are required to make advance payments on account of their expected future tax liability. The advance payments are based on the previous tax year’s liability and are likely to give rise to significant cash flow issues for executives as carried interest tends to be lumpy and unpredictable.

That being said, the exclusivity of the new trading income charge is simpler than the current position and a 34.1% rate may be a reduction for executives who cannot access the current 32% capital gains rate. For more, read Welcome changes made to new UK carried interest tax regime | Travers Smith.

6. Reform of UK's permanent establishment (PE) definition and investment manager exemption (IME)

Why it matters:

The concept of PE is important because having a PE can bring non-resident traders within the UK tax net on their profits (deriving from the establishment).

The UK rules relating to PEs have recently been amended so that, broadly, they are in line with the position set out in the current version of the OECD’s model double tax treaty. This includes widening the definition of PE itself, thereby potentially making more non-UK residents subject to UK tax.

UK private capital managers typically take care to ensure that they do not constitute a PE of their overseas clients, and, helpfully, the UK rules contain a specific exemption, the IME, designed to prevent that from occurring. In welcome news, as part of the PE reform package, the IME has also been updated, with the bulk of the changes designed to make it more accessible for private capital managers.

The reforms to the PE definition and IME have effect for chargeable periods beginning on or after 1 January 2026.

Our view:

Prior to the recent reforms, difficulties with accessing the IME meant that managers would often structure their affairs so as to fall outside of the basic PE definition (without having to rely on the IME), for example, by entering into advisory rather than discretionary management arrangements.

However, the reforms to the PE definition make it harder for managers to do this, as the definition now includes persons who habitually play the principal role leading to the conclusion of contracts by the non-resident (and not just, as was generally considered to be the previous position, those who actually have signing authority) – potentially encompassing some advisory arrangements. This makes the IME more important, and its expansion is therefore welcome.

Notably, the UK Government has not said that it will seek to amend the PE definition in the UK's existing double tax treaties (DTTs). This is typically a narrower definition, in line with the current domestic legislation. The effect of this is that even though the UK's domestic PE definition has been widened, taxpayers resident in jurisdictions with existing DTTs are likely to be entitled to relief on their UK trading profits provided they do not have a UK PE within the narrow definition.

7. Enterprise Management Incentives – more generous reliefs

Why it matters:

Enterprise management incentives (EMI) give growing companies in the UK the opportunity to grant employees tax-advantaged share options. EMI is particularly attractive for start-ups as they can be drafted flexibly to deliver the desired incentive and reward. From 6 April 2026, the size of company that can grant EMI options will increase when the gross asset limit for a qualifying company (or group) rises from £30m to £120m and the cap on the number of employees such a company or group can have doubles from under 250 to fewer than 500. The value of EMI options a company or group can award also doubles from £3m to £6m. At the same time, the maximum holding period for qualifying options will lengthen from 10 to 15 years. Legislation has been introduced that will allow the exercise period for existing awards to be increased without prejudicing their tax-advantaged status. 

Our view:

These changes are very welcome and will allow more businesses in the UK to offer EMI to their employees (including more AIM companies) as they move from start-up to scale-up. However, it's worth noting that no changes have been made to the independence requirement which means companies receiving investment from financial sponsors often can't grant EMI due to the way the funding is structured. This was one of the points that we (along with others in the incentives industry) raised in response to a call for evidence from the UK Government on how it can better support entrepreneurial activity in the UK. It is hoped that, as part of its review, the UK Government will consider additional ways in which EMI can be made more accessible.

8. Increases in employer NICs costs

Why it matters:

UK employers have seen their employment costs rise in a number of ways in recent months, including through the increase in employer National Insurance contributions (NICs). Salary sacrifice for pension contributions has traditionally been one of the ways in which employers seek to reduce their exposure to employer NICs but this will be subject to a £2,000 cap from April 2029. 

Our view: 

Although the changes to salary sacrifice for pensions will have an impact, this isn't necessarily the end for salary sacrifice as, depending on the nature of the company's workforce, it might be able to operate within the £2,000 cap. Also, it's worth remembering that employer contributions unconnected with salary sacrifice are still exempt from NICs and the tax reliefs for salary sacrifice and pensions are unchanged (for now). For some employees, salary sacrifice plays an important part in reducing their annual income to stay eligible for tax-free childcare and to avoid the personal allowance reduction. Companies can consider other ways of reducing their exposure to higher NICs costs such as transferring them to participants on option gains (where they have agreed to this) and considering bonus deferral into share options.

9. New obligations for those hiring workers through umbrella companies

Why it matters:

Umbrella companies are a form of intermediary through which temporary workers can provide services to clients without becoming their employees. Typically, the umbrella company employs the temporary worker who is then supplied to the client, often via a recruitment agency. The umbrella company has responsibility for the tax and NICs due on the worker's employment income through PAYE as well as providing them with benefits such as holiday pay, statutory sick pay and pension auto-enrolment. The UK Government notes the important role that umbrella companies play in the labour market but also acknowledges that some of them are being used to facilitate tax avoidance and even fraud.

New legislation has been introduced that will make businesses using these hiring structures jointly responsible for the PAYE and NICs due on the worker's wages. If there is a UK recruitment agency in the supply chain, this will usually be the entity with joint and several liability rather than the client the worker supplies their services to. However, where there is no recruitment agency in the supply chain or the agency is based offshore or is connected with the umbrella, joint and several liability for the umbrella's unpaid PAYE will fall on the client. The measures take effect from 6 April 2026 and will apply to payments under existing as well as new arrangements.

Our view:

The new rules are drafted very broadly and as well as applying to "traditional" umbrella arrangements (including, "employers of record"), they can create liabilities under dealings with "purported" umbrella companies including some personal service companies (PSCs). If a client engages a worker through a PSC and it is "reasonable for the client to suppose" that the PSC is the employer of the worker, a PAYE liability arises as if the worker was an employee of the PSC. If the PSC doesn't pay HMRC the PAYE that is owed, liability will fall on the client, assuming that there is no UK-based, unconnected recruitment agency in the supply chain. In practice, many businesses that engage workers through PSCs will already be thinking about their PAYE risks under the off payroll working rules and so adding this check as a further stage alongside any status determination statement process may not be particularly onerous. However, clients that don't currently have to worry about PAYE under the off-payroll rules because they are "small" and therefore outside the regime, will now need to think about whether they will have PAYE risks under the umbrella company rules. It is important to note that a client can't escape liability for the umbrella's PAYE under the new rules simply by putting the right checks in place or taking reasonable care.

10. Maximising use of tax-advantaged share plans

Why it matters:

The four tax-advantaged share plans available are Save As You Earn (SAYE) and Share Incentive Plans (SIP) (both of which must be operated on an all-employee basis), Enterprise Management Incentives (EMI) and Company Share Option Plans (CSOP) (under which awards can be made to selected employees). Companies that already have tax-advantaged plans or are considering adopting a new share plan should carry out a "health check" to make sure they are making full use of the tax and NICs savings they can offer.

For example, under a SIP, free shares with a value of up to £3,600 per annum can be gifted to employees completely free of income tax and employee and employer NICs. If employees remain in the business and their shares are held in the SIP for a minimum of 5 years, they can then be sold completely tax, NICs and capital gains tax free. From April, the ordinary and upper rates of tax on dividend income will increase by 2% from 8.75% to 10.75% and from 33.75% to 35.75% respectively (there will be no change to the dividend additional rate of 39.35%). Under a SIP, dividends paid on plan shares can be used to purchase additional dividend shares that will enjoy relief from income tax and NICs if they are held within the SIP for three years. Companies with CSOP plans should remember that the limit on the value of shares that an individual can hold as tax-advantaged options under the plan is £60,000 (increased from £30,000 back in 2023) and there is no overall limit.

Our view:

At the UK Autumn Budget 2025, the UK Government published the long-awaited response to a call for evidence on SAYE and SIP seeking views on the use of the schemes and whether they were achieving their policy objectives. Of the changes suggested by those responding, the most common was a call for the SIP holding period of 5 years to be reduced to better reflect current working practices. Although the UK Government has not committed to make any changes as a result of the call for evidence, it has acknowledged the points made and this is an encouraging sign for the future of these important plans.