UK Legal Update - Autumn 2025

Article Insights

Our round-up of recent and forthcoming developments in UK law and practice for our international stakeholders.

Highlights

• Trade: supply contracts in the age of tariffs and new international trade agreements 
• Data and cybersecurity: mitigating the risk of cyber-attacks and compliance with the new UK Data (Use and Access) Act
• UK Employment law: preparing for the UK Employment Rights Bill; and new UK pay gap reporting rules
• Commercial contracts: UK agency contracts in focus; key pricing and payment issues in UK contracts
• AI: a reminder of new EU AI Act obligations and the copyright debate - copyright holders and AI providers still polarised
• Sustainability reporting: keep track of the latest developments
• ECCTA: getting ready for the new UK identity verification requirements coming in November
• Energy and infrastructure: our bitesize video series on data centres and other sustainable infrastructure projects
• Consumer protection: potential new UK rules on fake or misleading consumer reviews, misleading "headline" prices and digital fairness on e-commerce websites
• Capital markets: will the UK Prospectus reforms boost UK capital markets? Updated Stewardship Code and the latest on the regulated trading platform for the UK
• Real estate: increasing the rights of UK tenants and buyers; energy-efficient buildings
• UK tax: dealing with the complex tax liabilities of cross-border workers 

1 AI, data and cybersecurity

1. No solution to the UK AI and copyright conundrum yet

It has been a busy summer in the AI copyright debate in the UK but no solution is in sight: the respective positions of copyright owners (who want to protect their work from being scraped by AI) and AI providers (who need vast amounts of material to train their models) still appear to be polarised.

Despite several attempts to address the issue, the UK's Data (Use and Access) Act 2025 (DUAA) has failed to do so. The DUAA only promises a UK Government report on the issue by March 2026, with a progress report in January 2026. The UK Government has also delayed the unveiling of an 'AI Bill' until at least summer 2026.

Will the UK courts provide an answer to the copyright issue?

There is no sign that the UK courts will provide an answer in the short term either, which places even greater importance on a legislative solution for the UK.

In June 2025, Getty Images dropped its UK High Court claims of primary copyright infringement and database rights infringement against Stability AI, in a trial that could have provided some clarity for the UK AI sector and creative industries alike. The decision to drop these allegations is largely due to the difficulty in establishing that the infringing acts (in relation to Stable Diffusion's training data and outputs) took place in the UK. The claims of trade mark infringement, passing off and secondary copyright infringement (as regards importing an "article" into the UK) remain, but these do not go to the heart of the hotly contested issue of training data and AI outputs infringing copyrighted works.

2. EU AI Act – obligations on new General Purpose AI (GPAI) models now apply in the UK

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. The EU AI Act's obligations for GPAI model providers took effect from 2 August 2025. Even though the extensive obligations on new high-risk systems and transparency requirements do not apply until 2 August 2026, we are advising our UK business clients to start preparing to meet these requirements now. Read our  briefing on the EU AI Act for more.

Advising UK businesses on AI literacy training

The EU AI Act demands that in-scope providers and deployers of AI systems take measures to ensure a sufficient level of AI literacy of their EU staff and anyone else using AI systems in the EU on the organisation's behalf. This obligation began to apply on 2 February 2025. Our  AI literacy briefing looks at the European Commission's FAQs on AI literacy and the steps that organisations should be taking to meet this requirement.

3. The UK Data (Use and Access) Act (DUAA) is finally here!

The DUAA, with its package of data protection and e-privacy reforms, is now in force and sets out a UK statutory framework for smart data and digital verification schemes.

Limited data protection reforms

A wholesale reform of UK GDPR this is not, which is undoubtedly a relief to most businesses who have already invested heavily in GDPR compliance – changes to data subject rights, for example, largely codify existing regulatory guidance. There have, however, been some limited relaxations to the rules in relation to automated decision-making, data transfers and cookies. Our  briefing on the data protection aspects of the DUAA provides some key takeaways for businesses operating in the UK.

The DUAA is unlikely to negatively impact the EU's adequacy decision in favour of the UK, the review deadline for which was postponed until 27 December 2025 to allow the UK time to finalise and pass the DUAA.

4. The EU's Data Act (EDA) begins to apply in the UK

Key data-sharing obligations in relation to connected products (IoT devices such as connected cars, smartphones, medical devices, connected TVs and health trackers) and cloud switching requirements began to apply in the UK from 12 September 2025 under the EDA.

Our briefing,  EU Data Act: compliance countdown for connected products, as well as our  earlier briefing, discuss the significant compliance burden imposed on connected product businesses. The EDA requires manufacturers and other data holders to share data (both personal and non-personal data) generated by the use of connected products with product users and, at the user's request, with third parties (as well as with government bodies for emergencies). There are also substantial contractual and transparency requirements.

Switching between cloud providers should get easier

As well as opening up access to data for connected products, the EDA imposes new obligations on cloud services providers operating within the EU to make it easier for customers to switch and transfer their data between competing providers. Providers may now only charge for costs directly incurred as a result of switching and must phase out all switching charges by January 2027.

We are advising our cloud service providers to update their terms and conditions and existing customer contracts to reflect the EDA's mandatory content requirements - see  our briefing on the EDA's changes to cloud services contracts.

From a UK perspective, the new Data (Use and Access) Act contains a framework for the UK Government to legislate for smart data schemes. The UK Government has not made any specific proposals in relation to cloud switching. However, the UK Competition and Markets Authority is expected to consider in early 2026 whether to launch a process for designating Microsoft and Amazon Web Services – the largest cloud service providers in the UK - as having "Strategic Market Power" under the UK Digital Markets, Competition and Consumers Act 2024. This would enable the CMA to take measures to facilitate cloud switching in relation to these two suppliers only (whereas the EU's measures apply to a much wider range of providers).

5. A new EU milestone for accessibility

Businesses, across a broad range of sectors, will be affected by the accessibility requirements of The European Accessibility Act (EAA), which came into effect in June 2025. The EAA applies to many categories of consumer products and services, particularly digital technologies, ranging from payment terminals and smartphones to consumer banking services and online shops. The aim is to make all these products and services accessible to everyone, including people with disabilities. See  our briefing for an overview of the European Accessibility Act's impact.

What's the UK position on accessibility?

The EAA applies to products and services provided in the EU  (including by UK-based businesses). There has been no suggestion from the UK Government that EAA-equivalent legislation will be introduced in the UK. However, businesses operating exclusively in the UK market also cannot afford to be complacent about accessibility.

UK businesses are still required to comply with the Equality Act 2010 which aims to protect people with certain protected characteristics from direct and indirect discrimination, victimisation and harassment. Under the Equality Act, businesses are required to: (i) make reasonable adjustments to ensure disabled individuals have equal access to its services, including websites and mobile apps; and (ii) address any substantial disadvantage faced by disabled users.

It is also possible that an EAA-compliant standard may become the market norm, even in the UK, once the EAA takes effect, therefore businesses operating in the UK should be on the front foot with ensuring the products and services they provide are accessible.

6. Data breach? There is no threshold for seriousness for data protection claims

A recent UK Court of Appeal decision may make it more difficult for defendants to dispose of low-value claims at an early stage. In the Farley case, the UK Court of Appeal confirmed that there is no seriousness threshold for data protection claims (choosing to follow the approach of the European Court of Justice).

The UK Court of Appeal also found that the actual disclosure to a third party was not an "essential ingredient" of an allegation of processing or infringement. Businesses can therefore be liable under data protection law for administrative errors that they may categorise as "near-misses", such as sending data to the wrong address, where no third party accesses the data.

Does this decision open the floodgates to low-value claims for data breaches?

No, we do not expect this to be the case.

It is clear from the decision that the UK courts will give short shrift to hypothetical or speculative claims of harm that are not "well-founded". The test is whether a reasonable person in the claimant's position, knowing what they knew at the time, would have had a genuine reason to fear that their data might be misused.

The decision also provides further support for low-value claims to be pushed down to the lower UK courts.

Moreover, nothing in the Farley  case reverses the position in respect of collective claims following Lloyd v Google (see our briefing  here). Lloyd v Google  burst the bubble of opt-out representative actions, making mass data protection claims less attractive and more difficult to pursue in the UK. The UK Court of Appeal in Farley  simply made the point in relation to collective claims that the mere fact that a large number of low-value claims are brought together does not make them automatically abusive or justify striking them out in bulk.

See  our briefing on Farley v Paymasterfor 3 key takeaways for UK businesses.

7. Spate of high-profile cyber-attacks in the UK underscores the need for vigilance

In the wake of the recent high-profile cyber-attacks in the UK, from Marks & Spencer, Harrods and the Co-op in the spring, through to Jaguar Land Rover and Heathrow in September, incident response and supply chain attack preparedness should be treated as board-level priorities to limit the significant business disruption, cost and impact on customer confidence which these incidents can entail.

A number of these attacks were targeted at supply chains.  Our briefing on cyber risks in the supply chain focuses on these supply chain risks and how to mitigate them.

UK's Cybersecurity and Resilience Bill is yet to emerge

Recent cyber legislation has generally targeted financial services, critical national infrastructure or essential services. However, new obligations in respect of cyber resilience already apply in the EU to IT managed service providers (under NIS2) or will apply to them in the UK (pursuant to the UK's forthcoming Cyber Security and Resilience Bill, due to appear later this year).

It is currently unclear whether the Bill will reflect the UK  Government's proposals aimed at curbing ransomware attacks by banning some ransomware payments and increasing reporting around ransomware attacks.

2 Business and trade

1. What does the UK-EU "reset" mean for business?

Earlier this year, the UK and the EU reached a "common understanding" on closer cooperation across a number of key areas which has obvious political significance. But what does the deal mean for business? And could it open the door to a closer relationship in future, particularly on trade and economic matters?

Key issues

Our briefing looks at:

• what's been agreed and the likely timeline for future talks and implementation
  
  
• whether the UK will have to align with EU law and how disputes will be dealt with
  
  
• changes to trading arrangements for agri-food products
  
  
• implications for youth mobility and business travel
  
  
• emissions trading system, carbon border adjustment and participation in the EU electricity market

2. Liberation day: what US tariff changes mean for international supply contracts

In light of the ongoing uncertainty over increases in US tariffs, we look at the contractual implications for both suppliers and customers involved in international trade.  Our briefing discusses:

• who is liable to pay tariffs, including the impact of Incoterms;
• and whether parties can avoid their contractual obligations based on force majeure clauses, material adverse change (MAC) clauses or frustration.
  
  

3. The UK's trade agreements in a changing world

Against a backdrop of increased geopolitical instability,  in this briefing we look at what recent UK trade deals with the US and India mean for business and what to watch out for in the next 12-18 months. We have also updated our  interactive maps of the UK's trade agreements.

3 Commercial contracts

1. UK gets tough on late payment

Larger businesses operating in the UK who regularly use SME suppliers face a significantly tougher late payment regime. The UK Government is consulting on major changes to the law on late payment – including powers to fine businesses which fail to pay suppliers on time and restrictions on customers' ability to withhold payment in the event of a dispute and a new arbitration system. Suppliers will also be interested in our  top tips for getting paid on time.

Key proposals

• The UK Small Business Commissioner will be able to fine businesses with poor payment records or which persistently fail to comply with late payment obligations
  
  
• Statutory interest rate on late payments of base + 8% to be made mandatory (i.e. no "contracting out", as at present)
  
  
• Prohibition of payment periods of more than 60 days (reducing to 45 days over 5 years)
  
  
• 30 day deadline for disputing invoices (if customer wishes to withhold payment)
  
  
• Binding arbitration scheme, administered by the UK Small Business Commissioner, for payment disputes involving businesses with fewer than 50 employees
  
  
• Large UK companies and LLPs to be required to report on the amount of statutory interest owed and paid out
  
  
• Audit committees or company boards of large UK companies and LLPs to be required to make regular recommendations to improve payment practices

Read  our briefing for more.

2. UK Supreme Court ruling in motor finance litigation: wider implications for UK agency agreements

The UK  Supreme Court's ruling in recent motor finance litigation has some significant implications for UK agency contracts. Most cars sold in the UK are bought on credit, involving commission payment to a broker. The litigation involved an attempt to claim that commission payments to car dealers for arranging finance amounted to secret profits. The allegation was that, as these arrangements had not been adequately disclosed, they should be paid to the consumers to whom the cars had been sold (along with the related finance packages).

The UK Supreme Court has now clarified the law on secret profits, explaining that it only applies where the relevant business is acting in a fiduciary capacity i.e. it owes a duty of loyalty to its principal/customer (in this case, the consumer) to disclose any gains (such as commission) that it makes by virtue of its position.

Are car dealers fiduciaries if they also offer finance?

The UK Supreme Court also found that car dealers offering finance are not generally fiduciaries. As a result, most of the claims in the litigation failed, although one succeeded on the basis that the finance deal breached consumer credit rules. The rationale for the UK Supreme Court's conclusion on fiduciaries was that the main thing that the customer expects from a car dealer is to be sold a car – the finance is secondary and unless the dealer has, for example, undertaken to go out to the market and find the best finance arrangements as well, it won't normally be regarded as a fiduciary. It is therefore free to offer finance deals in which it has a commercial interest, subject to the consumer credit rules.

Key takeaways for agency agreements in the UK

• Agents won't always be fiduciaries in respect of all their activities (just as the car dealers did not owe fiduciary duties in respect of the finance packages they offered to customers).
  
  
• Where an agent does owe fiduciary duties, commission payments must be adequately disclosed to the principal, who might otherwise be able to bring a claim for revenue to which the agent believed it was entitled. These sums can be substantial. For example, had all the claims in this case succeeded, some estimates put the sums which would have had to be repaid across the whole sector at £30 billion.
  
  
• Despite the failure of the secret profits claims, it is thought that around £9 billion may still need to be repaid for failure to comply with consumer credit rules – highlighting how such non-compliance can also give rise to very significant liabilities.

For more, including the implications for lenders in the UK,  read this briefing.

3. Outsourcing Spotlight – Spring/Summer 2025

In this  Outsourcing Spotlight, we look at:

•  whether a possible change to equal pay rules could undermine incentives to outsource;
  
  
• the implications of the UK Government's Immigration White Paper; and
  
  
• new UK legislation on premises and consumer-facing outsourcings.

We also take an in-depth look at longer term outsourcings and provide a roundup of developments on contract law, AI, tech and data relevant to outsourcing.

4. Payment issues in UK commercial contracts: the supplier perspective

In  this four-minute video, Rich Offord, Kirsty Emery and Jonathan Rush discuss what suppliers can do to make sure they get paid. Topics covered include:

• tips on how to push back against customer demands for long payment terms;
  
  
• additional protections such as parent company guarantees; and
  
  
• the value of reporting obligations to provide early warning of financial problems at the customer.

Pricing and payment video series

Other videos in our  spotlight on pricing and payment series include:

• Payment issues in commercial contracts from a customer perspective
• Pricing issues in commercial contracts: a 5 minute primer

4 Company law

ECCTA – Extraterritorial effect and new identity verification regime

• 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), which intends to hold businesses to account for fraud committed by their associates. The FTPF Offence came into force on 1 September 2025. Under the FTPF Offence, in scope organisations can be liable where a specified fraud offence is committed by an employee, subsidiary or agent, for the organisation's benefit (or benefitting a client of the organisation), and the organisation did not have reasonable fraud prevention procedures in place at the time the offence took 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.

For more on the FTPF Offence, read our briefing  The UK Failure to Prevent Fraud regime takes effect on 1 September: Here's what you need to know.

• IDV: The new ECCTA identity verification regime (IDV) for individuals associated with UK companies and LLPs, including those based overseas, becomes a legal requirement from 18 November 2025 (the IDV Commencement Date).

The UK's register of companies, Companies House, had already launched its Authorised Corporate Service Provider (ACSP) registration service to enable individuals voluntarily to verify their identity. From the IDV Commencement Date, the position will be as follows:

Directors:

New company: Directors of a company incorporated after the IDV Commencement Date, must have completed IDV when the incorporation documents are filed at Companies House, as the incorporation documents must contain the unique identifier for each director (please note that the unique identifier is referred to by Companies House as a director's "personal code").

Existing company: Directors of an existing company must confirm that they have completed IDV when the company files its next annual confirmation statement following the IDV Commencement Date. Directors must provide their unique identifier as part of that filing.

New directors appointed to an existing company after IDV Commencement Date: Directors appointed after the IDV Commencement Date to an existing company must have completed IDV when appointed, providing their unique identifier as part of the documentation filed with their appointment.

Persons with Significant Control (PSCs):

Existing PSCs who are also directors: Individuals who are PSCs and also  directors of an existing company must provide their unique identifier within 14 days of the date the existing company is required to file its next annual confirmation statement following the IDV Commencement Date.

Existing PSCs who are not directors: Individuals who are PSCs of a company, but are not directors of that company, must file their unique identifier within 14 days of the beginning of their next birth month following the IDV Commencement Date. For example, if a PSC's date of birth is 22 January, the 14-day period begins on 1 January 2026 and ends on 14 January 2026.

New PSCs after IDV Commencement Date: Individuals who become PSCs after the IDV Commencement Date must provide their unique identifier within 14 days of being added to the Companies House register.

Note: PSCs who are also directors of the same company must provide their unique identifier separately for both  positions. When a PSC needs to provide this information depends on the PSC's situation. A separate service for filing a PSC's unique identifier at Companies House will be available from the IDV Commencement Date.

Limited Liability Partnerships/LLPs:

The same rules apply to LLPs but with the directors' IDV obligations being substituted for IDV obligations on all members of the LLP (and not just the designated members).

What we still don't know

Companies House state that mandatory IDV will commence at a date (not yet specified) for:

• people who file documents at Companies House;
• limited partnerships;
• corporate directors of companies;
• corporate members of LLPs; and
• officers of corporate PSCs.

For further information on IDV read our briefing:  Economic Crime and Corporate Transparency Act 2023: What to expect from the new identity verification regime.

Other changes announced by Companies House having effect from 18 November 2025

Specific local registers to go: As from 18 November 2025, the requirement for a UK company to maintain its own registers of directors, directors' residential addresses, secretaries and PSCs will be removed. This obligation is replaced with the requirement to file the same information at Companies House. We expect that, notwithstanding this change, most companies will still maintain these local registers in the medium to longer term.

Companies are now specifically required to maintain their own register of members: A company currently does not need to maintain its own register of members. It can opt for this information to be recorded in its register of members on the central register maintained under section 1080 of the Companies Act 2006. With effect from 18 November 2025, this option will be removed and all companies will be required to maintain their own register of members.

5 Competition

1. A fine line for green collaboration: balancing sustainability goals with antitrust compliance

As ESG goals and 'pro-growth' initiatives remain high on governments' agendas, it is no surprise that competition law is having to examine its interaction with the green transition.

In the EU, and building on the European Green Deal, the 2024 Draghi report on competitiveness draws a clear link between clean energy and increased competitiveness. The structure of the new European Commission is indicative of the European Commission's support for that message, with Teresa Ribera's position combining responsibilities for competition and the EU's Green Deal (as Executive Vice-President for a Clean, Just and Competitive Transition and the Commissioner responsible for Competition).

In the UK, the green transition is equally a key element of the UK Government's "pro-growth" agenda, as it recently published the Clean Power 2030 Action Plan and re-launched the Net Zero Council.

It is clear that, for change to occur on a global scale, private sector cooperation on the transition to net zero is required – and this is where competition law comes in. Due to the significant investments involved in climate-related projects (in terms of costs, technology and expertise) and "first mover disadvantages", single firms may be unable or unwilling to achieve meaningful change working alone. The challenges lie in navigating what types of collaborations will be permitted, especially when having to navigate antitrust rules in multiple jurisdictions.

Read our longer article  A Fine Line for Green Collaboration for more from our Competition Team on the balancing of sustainability goals with antitrust compliance

2. National Security in the first year of the new UK Government

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 this  briefing, we consider their approach, 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;
  
  
• Defence still tops the list for numbers of notifications;
  
  
• The largest number of final orders involved UK-based investors, followed by China and the USA. However, of those UK investors, a relatively large number involved corporate links associated with other countries.

56%

The highest proportion of all accepted and rejected notifications related to the DEFENCE area of the economy. This is followed by critical suppliers to the government with 21% and military and dual-use with 19%.

So, largely a continuation of existing trends – but watch this space for more changes afoot in the NSI Act space, intended by the UK Government to make the regime more targeted whilst also supporting its "pro-growth" agenda.

3. Antitrust on the menu: No-poach deals and minority stakes stir up the food delivery sector

Competition law enforcement in labour markets is a trend garnering attention amongst antitrust authorities across the globe - and heightened competition enforcement in this area looks set to stay. In a landmark decision for the European Commission, Delivery Hero and Glovo were found to have breached competition law by agreeing not to poach each other's employees, together with exchanging commercially sensitive information and allocating geographic markets between them.

Not only is this the first investigation initiated by the European Commission in the labour markets space, but it is also the first time that the European Commission has sanctioned the anti-competitive use of a minority shareholding in a competing business.

Businesses should be acutely aware that no-poach (and wage-fixing) arrangements are squarely within global focus and that the consequences of breaching competition laws can be severe (with fines of up to 10% of global turnover, potential private damages claims and, at the UK level, the risk of individual sanctions such as director disqualification). Interactions between businesses on labour issues should therefore be viewed with the same caution as those regarding typical parameters of competition (such as price, innovation etc).

Businesses should also be aware that minority, non-controlling shareholdings do not immunise conduct from antitrust scrutiny – even if there may be a plan to build up the businesses' shareholding in its rival to a full control scenario in future. Where a minority stake falls short of control, the underlying businesses will be treated as independent competitors and, hence, subject to competition laws.

Read our key take-aways from the European Commission's decision here  Antitrust on the Menu: No-Poach Deals and Minority Stakes stir up the food delivery sector | Travers Smith.

Consumer protection

1. UK's tough new consumer protection regime: what's the current state of play?

The UK has  one of the toughest consumer law enforcement regimes in the world, with the prospect of fines of up to 10% of global turnover on business-to-consumer (B2C) businesses for infringing UK consumer law and a raft of new powers for the UK's Competition and Markets Authority (CMA), since the consumer law provisions of the UK Digital Markets, Competition and Consumers Act 2024 (DMCCA) came into force on 6 April 2025. Now that we are almost 6 months into the new regime, we look at the latest state of play.

When can we expect the UK's CMA to use its new enforcement powers?

The CMA is understood to be looking at potential cases for the first use of its new powers under the DMCCA. The lack of immediate action does not mean that the regulator intends to take a "softly softly" approach over the medium to longer term. From the CMA's perspective, it makes sense not to be over-hasty in terms of enforcement at a point where the mere introduction of the new regime may be sufficient to prompt at least some businesses to "raise their game" in terms of compliance. However, the regulator has been instructed by the UK Government to make use of its new powers under the DMCCA – so as regards enforcement, the question is more "when" rather than "if".

From the regulator's perspective, the ideal "first case" would involve a reasonably high-profile business or sector and a serious breach of consumer law – enabling the CMA to impose a significant penalty and perhaps even make an order to compensate affected consumers. It will also want to be reasonably confident that its ultimate decision will stand a good chance of surviving any appeal – a significant reversal early on in the new regime could weaken its deterrent effect. In view of this, it's not particularly surprising that we are yet to see the CMA "flexing its muscles" in a significant way in the consumer protection space. Even so, as we highlight in section 2 below, the CMA has already begun the process of enforcing new rules on fake and misleading consumer reviews – having allowed businesses a 3-month grace period in which to comply.

What else should B2C businesses be watching out for?

Businesses targeting consumers in the UK should also be watching out for:

• Fake or misleading reviews: in our view, the majority of B2C businesses are likely to need to take at least some action to comply with the new rules in the DMCCA – see 2 below.
  
  
• Pricing guidance: as we explain in 3 below, the CMA has been consulting on new guidance in this area and the DMCCA makes it significantly easier for regulators to take enforcement action on pricing.
  
  
• Subscription contracts: we are advising businesses to plan ahead for the complex and prescriptive new DMCCA regime for subscription contracts, requiring B2C businesses to give consumers a 2-week "cancellation window" at least every 6 months and to send reminders ahead of any renewal payments. Although not expected to be brought into force until April 2026 at the earliest, it may necessitate changes to sign-up and customer relationship management processes. Look out for our briefing on this in the coming months.

What else should B2C businesses be watching out for?

With a substantial increase in the risk of non-compliance under of the DMCCA, consumer-facing businesses need to consider whether they are doing enough to limit their exposure. Key questions to ask include:

• Are we in a higher risk category? (see section 3 of  this briefing)
  
  
• Are there any weaknesses in our existing practices and processes involving consumers? Just because regulators have not seen fit to investigate in the past doesn't mean they will adopt this approach in future, now that they have much stronger powers at their disposal and a mandate from the UK Government to use them. Remember that the CMA is actively looking for enforcement targets.
  
  
• Are our existing processes (e.g. customer sign-up) likely to remain compliant and if not, how easy would it be upgrade them to e.g. meet the new rules on subscription contracts or misleading/fake reviews? Are there any longer term projects where the specification may need to be adapted to take account of the DMCC Act?
  
  
• Are relevant staff – particularly those in sales roles – aware of the risks that infringing consumer law poses to the business? Do staff need a refresher on what types of behaviour or practices are likely to be problematic?
  
  
• Do we have a plan for how we would respond if investigated by the CMA for breaches of consumer law? The DMCC Act also significantly strengthens the CMA's investigatory powers and fines can be imposed for non-compliance with e.g. information requests.

2. Fake or misleading consumer reviews: time's running out to take action

The UK Digital Markets, Competition and Consumers Act 2024 (DMCCA) imposes new requirements on businesses to prevent the publication of fake reviews or misleading review information. It also prohibits the commissioning of fake reviews and the publication of "concealed incentivised reviews" (where the consumer was e.g. given the product for free in return for providing a review - but the incentivisation has not been made clear).

Who's affected by this?

Given the  new duty to take "reasonable and proportionate steps" to prevent fake or misleading reviews, our view is that most B2C businesses will need to take at least some action to comply – even if they don't host reviews on their own websites, but rely instead on third party platforms such as Google, Trustpilot or specialist sectoral sites such as carehome.co.uk (for the eldercare sector). In the light of recent CMA guidance, most will also need to consider whether they should have a published policy on fake and misleading reviews – and it's worth noting that the CMA has recently conducted a "web sweep" to test compliance with this aspect. In over half the cases it looked at, B2C businesses either did not have a policy at all, or it was difficult to find and/or deficient in certain respects.

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.

Our briefing  Fake or misleading consumer reviews: time's running out to put your house in order explains the risks in more detail and provides a helpful checklist of issues to consider.

3. B2C businesses: are you at risk of misleading consumers on price?

The UK Competition and Markets Authority (CMA) has been consulting on draft guidance setting out how prices should be presented to consumers – including delivery charges, booking or admin fees, local taxes, joining fees and other sums that may make up the total price for a product or service. It is particularly concerned about misleading "headline" prices, which don't include additional charges that most consumers will end up having to pay.

Our briefing explains how the DMCCA tightens up the law in this area, in particular by making it significantly easier for regulators such as the CMA to enforce. It also explains some of the key issues you may want to consider when it comes to the price-related content of promotional material.

4. Fines for directors and managers for breach of UK consumer law?

So far, attention has tended to focus on the significant penalties for businesses under the new consumer regime contained in the Digital Markets, Competition and Consumers Act 2024 (DMCCA). But the DMCCA also allows fines of up to £300,000 to be imposed on certain individuals – including directors and senior managers – based on their involvement in consumer law breaches. Our briefing explains  what the legislation says and looks at when these powers might be exercised in practice.

7 Dispute resolution

Abolition of the Shareholder Rule in the UK – what difference will this make to shareholder actions?

The so-called 'Shareholder Rule', which provided that a company could not, in litigation, withhold documents from its shareholders on grounds of legal advice privilege, has been abolished by the UK Privy Council. Legal advice/professional privilege ensures that confidential communications between a client and their legal adviser are protected from being disclosed to others. 

In a world of increasing shareholder activism, this decision may encourage directors to obtain legal advice more readily, without fear that shareholders may later be able to access it as of right. Shareholders may also find it harder to obtain documents to ground claims against the company, such as unfair prejudice petitions.

The Privy Council is not a court of the United Kingdom and so while its decisions are persuasive, they are generally not binding as a precedent. However, in the case (Jardine Strategic Limited v Oasis Investments II Master Fund Ltd & Others), the Board (also being Justices of the Supreme Court) made a direction under Willers v Joyce  and declared that this decision is binding in the courts of England and Wales.

In Jardine Strategic Limited v Oasis Investments II Master Fund Ltd & Others, the UK Privy Council considered the original proprietary underpinning for the Shareholder Rule – namely, company funds were used to procure the advice, so shareholders (as owners of the company) should be able to access those documents – and found it to have "collapsed" as a justification. The board went as far as to say: "Like the emperor wearing no clothes in the folktale, it is time to recognise and declare that the Rule is altogether unclothed."

UK employment law

1. Pay reporting and transparency – more regulation in prospect

Employers in the UK with 250 or more employees must already report on their gender pay gap figures annually. Additional reporting requirements may be on their way.

Earlier this year the UK Government carried out a public  consultation setting out proposals to introduce mandatory disability and ethnicity pay gap reporting. The new requirements would mirror the existing framework for gender pay gap reporting but, 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. Employers will need to assess the data they already have and consider what additional data they will need to collect, and how to ensure this is GDPR compliant.

The UK Government has not given a date for the introduction of ethnicity and disability pay gap reporting, but it is unlikely to be before 2027.

UK employers with EU operations may also be covered by the EU Pay Transparency Directive which will introduce pay reporting and information obligations from 2026. 

2. Harassment at work

All UK employers have had a duty to prevent sexual harassment at work since October 2024. This duty will be strengthened (under the Employment Rights Bill) in 2026, with new regulations detailing the steps employers should take to comply with the duty. In addition, employers will be liable for harassment of their employees by third parties, such as clients or suppliers (this covers harassment on any grounds, not just sexual harassment). New rules on NDAs and confidentiality clauses (e.g. in settlement agreements) will mean that employers will be unable to prevent employees from disclosing information about discrimination or harassment (subject to certain exceptions, the detail of which is awaited).

UK employers will need to review and update their current policies and procedures, including third party contracts, to ensure compliance with the new harassment laws. It is also important to have thorough and transparent processes for investigating allegations of discrimination or harassment, particularly in light of the proposed ban on confidentiality provisions in settlement agreements in relation to discrimination/harassment allegations.

3. Changes to UK employment law

The new Employment Rights Bill will introduce significant reforms to UK employment law. It is anticipated that the Bill will be passed this autumn, but most of the reforms are not expected to come into force before 2026 or 2027. 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 employers in the UK 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 employers in the UK 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.

The UK Government is expected to consult on the above measures over the next few months. For more about the changes and implementation timetable, and what this means for employers in the UK, read our briefing  Employment Rights Bill What does it mean for employers? | Travers Smith.

Keeping you on track with regulatory change in the UK

Catch up on the latest employment and business immigration developments by reading or listening to our  latest Employment Update.

Our  In the pipeline timeline guides you through forthcoming developments in UK employment law and business immigration.

9 Energy and infrastructure

1. Infrastructure and Energy Spotlight – Spring/Summer 2025

Our latest  Infrastructure and Energy Spotlight looks at:

• the UK Government's 10 year Infrastructure Strategy – did it tell us anything new?
  
  
• whether the "Washington effect" has trumped the "Brussels effect" in relation to ESG regulation;
  
  
• how infrastructure funds can use continuation vehicles as an alternative exit route for investments;
  
  
• infrastructure deals and national security: how the UK Government is balancing foreign investment against geopolitical concerns;
  
  
• how the UK Government is looking to encourage pension funds to invest in infrastructure and energy projects; and
  
  
• what difference the EU Omnibus and the UK-EU reset deal will make to carbon markets.

We also provide a roundup of key recent developments on planning and housing.

2. Data centres in the UK: where are we now?

In the latest in our series of  bitesize Energy & Infrastructure videos, Real Estate Partner Sarah Walker discusses where we are on data centre development in the UK and how to bridge the gap between supply and demand.

Bitesize Energy & Infrastructure videos: other topics

The other topics covered in the  series are:

• district energy / heat networks
• smart meters
• solar energy
• heat pumps
• electric vehicles and charging infrastructure
• ground source heat pumps
• carbon capture & storage
• hydrogen
• biofuels

3. A guide to heat networks in the UK

The UK heat network is growing fast, providing opportunities for both suppliers and property developers / owners looking for low carbon energy solutions. The investment potential has been estimated at £60-80 billion.  Our guide explains:

• what heat networks are and how they work
• the current state of play in the UK heat networks market
• what is meant by heat network zoning and where the zones will be located
• how heat networks are regulated and what this means for network operators and owners, occupiers and developers of buildings
• what contractual arrangements are needed to facilitate heat networks.

Regulation of heat networks: key takeaways

A new UK regulatory regime for heat networks is expected to come into effect in January 2026. Among other things, it will require entities involved in the supply of heat and hot water via networks to comply with consumer protection obligations, provide certain information to the regulator (Ofgem) and draw up contingency plans for continuity of supply in the event of network failure. Landlords should note that in some cases, they could be regulated entities. For more information, see our  detailed guide.

10 Equity capital markets

1. Prospectus reform - a boost for UK capital markets

It is hoped that the UK's Financial Conduct Authority's (FCA) long-awaited final prospectus rules will provide a much-needed boost to the UK's capital markets and to London's global attractiveness as a listing venue as well as enabling companies to be more competitive in M&A processes. The new rules, which will replace the current UK prospectus regime, were published on 15 July. The new Admissions to Trading on a Regulated Market Sourcebook will take effect on 19 January 2026, allowing companies time to familiarise themselves with the new regime.

A changed landscape for secondary fundraisings: The process of transacting IPOs on the London Stock Exchange's main market will be unchanged; an FCA-approved prospectus will still be required. In contrast, the landscape for secondary fundraisings will look very different; the current limit on issuing over 20% of a company's issued share capital in a 12-month period, beyond which a prospectus is required, will be raised to 75%. This is significantly higher than the EU threshold, which has been raised to 30% for companies whose shares have been listed for less than 18 months. Unless there are specific marketing requirements, a secondary fundraising by a main market company will not trigger a prospectus provided the shares being issued are under 75% of the issued share capital. This will allow already-listed companies much more flexibility when undertaking such transactions.

Transactions marketed overseas:  For transactions marketed in certain overseas jurisdictions, particularly the United States, in some circumstances an offer document will need to be produced to satisfy customary disclosure requirements and market expectations even in circumstances when a prospectus would not otherwise be required under the new rules.

See our note for more details:  New Prospectus Rules announced – Top takeaways | Travers Smith.

For commentary on the implications of PISCES for private share plans,  see our article in section 14 (UK Tax).

2. PISCES, a new type of regulated trading platform: Legal framework now in place

As previously reported, 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.

The legal framework for the PISCES regime is now in place, following the publication of the FCA's Sourcebook in June. Persons who wish to become operators within the PISCES sandbox can now to apply to the FCA for the relevant permissions. The London Stock Exchange (LSE) was, as anticipated, first off the mark. The FCA recently announced that it has approved the LSE's application to operate within the PISCES sandbox. In advance of the launch of the LSE's PISCES platform (to be known as the Private Securities Market) sometime later in the year, the LSE published the rules for persons who wish to participate within its platform. As we have previously reported, a PISCES platform will allow intermittent trading of private company shares.

To find out more about PISCES, please see our client briefing  PISCES – Key questions answered.

For commentary on the implications of PISCES for private share plans, see our article in  section 14 (UK Tax).

3. Financial Reporting Council (FRC) publishes the updated UK Stewardship Code 2026

The updated UK Stewardship Code 2026 (the Code), published in June, will replace the 2020 Code on 1 January 2026. The Code aims to streamline reporting obligations and reduces the number of Principles from twelve to six (with five related Disclosures), refocusing efforts on effective stewardship rather than tick-box compliance.

In a departure from the previous Code, the definition of stewardship now centres on creating long-term sustainable value for clients and beneficiaries, with only limited reference to the environment and society in the supporting statement. This represents a compromise between asset owners, asset managers, industry associations, non-governmental organisations (NGOs) and the FRC.

Reporting will be split into two documents: a Policy and Context Disclosure (to be published every four years) and an Activities and Outcomes Report (to be published annually), reducing the reporting burden by an estimated 20–30%, which is likely to be welcomed by industry. Both the Policy and Context Disclosure and the Activities and Outcomes Report must be signed off by senior leadership. The Code will be implemented in 2026, with a transitional year and updated guidance drafted for industry feedback.

For more information on the Code, see our  briefing.

11 UK pensions

1. UK Pension Schemes Bill

The UK Pension Schemes Bill will make important changes to defined benefit (DB) schemes, defined contribution (DC) schemes and the Local Government Pension Scheme. Key provisions include:

DB surplus extraction: it will become easier for UK employers to access surplus in DB schemes. The Bill introduces a new statutory power for trustees to modify a scheme (unless in winding-up) by resolution to give a power to make payments out of surplus to employers, subject to any restriction specified in the resolution. Where there is already such a power in the scheme rules, a resolution may remove or relax any restriction imposed by the scheme on the exercise of the power. Further detail will be set out in regulations. The UK Government anticipates that these legislative changes will be in force by late 2027.

For further detail on surplus extraction and the other DB aspects of the Bill (including the legislative regime for superfunds, the pension protection levy, and recoupment of overpaid pension), see our  recent update.

DC pension evolution: The DC provisions in the Bill are wide-ranging, and include:

• a forthcoming 'value for money' regime for DC default arrangements, on which there has been an FCA consultation;
  
  
• new requirements for schemes and providers to offer a range of decumulation options, including one or more default solutions designed to scheme members with a regular income in retirement;
  
  
• consolidation in the DC market by requiring 'megafunds' with minimum scale; and
  
  
• a potential 'mandation' power through which the UK Government could require master trust and group personal pension default arrangements to invest at least a specified percentage of the assets in private markets, including in the UK.

For further detail on the DC aspects of the Bill, see our  recent briefing.

2. UK Inheritance tax on pensions

The UK Government has responded to its consultation on the application of inheritance tax to registered pension scheme interests following a member's death from 6 April 2027.

A significant change to the original proposals is that it will be the deceased individual's personal representatives (PRs), rather than the scheme trustees/administrators, who are liable for reporting and paying any inheritance tax on any "unused pension funds". The beneficiaries will be jointly and severally liable for paying any inheritance tax.

The UK Government has also amended its proposals so that death in service benefits payable from registered pension schemes (DB or DC) will not be in scope of inheritance tax. As under the original proposals, the exemption for payments to the spouse or civil partner or charities also applies.  For more, go to section 14: UK tax..

3. VAT - investment costs

The UK's HMRC has announced increased availability of VAT recovery for DB pension schemes' investment costs, with immediate effect. We await detailed information about the change, so the extent of the good news is unclear. For most schemes, it will be a case of waiting to see what the final guidance (scheduled to be published by the Autumn) says, but others should take action now to protect their position in respect of the last four years. For more on this see our  recent briefing.

Spotlight on UK Pensions

For more detail on all of the above developments (and more), please see the latest edition of  What's happening in Pensions. Use our  Pensions Radar  to keep track of future changes in UK law affecting work-based pension schemes.

12 UK real estate

1. Transparency in the UK real estate sector – the next step?

The current and previous UK governments have been increasing the transparency of property ownership during recent years, including the establishment of the Register of Overseas Entities and the extension of the Trusts Registration Service. Part 9 of the Levelling up and Regeneration Act 2023 contains provisions for the introduction of a system to increase transparency of contractual arrangements used to exercise control over the buying or selling of land, as explored in a  previous briefing. The current UK Government appears to be pushing ahead with this idea, which would put data about option agreement and pre-emption agreements into the public domain. There is some doubt as to whether the public interest in knowing which developers might decide to develop properties in their area does in fact outweigh those companies' commercial imperative to keep that information private from competitors.

2. Increasing the consumer rights of tenants and buyers in the UK

The UK Renters' Rights Act is now law and represents seismic change in the UK residential lettings sector. There have been concerns in the investor community that the UK courts do not have capacity to cope with the anticipated influx of cases that will result from landlords losing the ability to serve so-called 'no fault' eviction notices. Now that it is law, the Act brings to an end years of uncertainty and heralds a new era of compliance for private sector landlords. In the next few weeks the Government will set out the timeline for implementation. In the meantime, read  our briefing for further details of what the new regime means for investors.

Meanwhile, the UK Competition and Markets Authority (CMA) is consulting on  draft guidance setting out how prices should be presented to consumers – including delivery charges, booking or admin fees, local taxes, joining fees and other sums that may make up the total price for a product or service. It is particularly concerned about misleading "headline" prices, which don't include additional charges that most consumers will end up having to pay. This is relevant for consumer-facing parts of the real estate industry such as build-to-rent, retirement living and student accommodation, and for property agents which advertise properties for sale or let. Our briefing on this topic is  here.

3. Energy efficiency in buildings

One of the provisions of the UK Renters' Rights Bill, referred to above, is that UK residential properties that are let out in the private rental sector will (like social/public housing) become subject to minimum housing standards as set out in Awaab's Law and the Decent Homes Standard. These standards tackle the issues of damp/mould and thermal comfort respectively, which are both related to insulation. The issue is that the sector is still waiting to find out whether the UK Government plans to increase the minimum energy efficiency levels required in the MEES Regulations from E to C and, if so, when. Read  this briefing for more.

3. Banning upwards-only rent reviews

In July 2025, the UK real estate sector was startled to discover, buried at the back of the English Devolution and Community Empowerment Bill, provisions that would replace contractually-agreed upwards-only rent review provisions in commercial leases with upwards-and-downwards provisions. The UK Government's explanatory notes state that these changes will "end upwards only rent review clauses in commercial leases to prevent vacant shops and regenerate high streets in communities across the country". However, there is concern across the industry that this ban could have the opposite effect. Our  earlier briefing explores the experiences of similar provisions in the US, Australia and Ireland.

13 Sustainability

1. Sustainability reporting: keeping track

It remains important for all businesses to follow the progress of the various sustainability reporting proposals across the globe, including the EU's Omnibus Directive and its impact on CSRD and CS3D, and the UK's own proposed new framework, US SRS. For more on these and other key proposals, see below.

• CSRD and CS3D: The substantive amendments to the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CS3D) introduced by the first Omnibus package continue their journey through the EU legislative process.

The Council of the EU announced in June 2025 that it had agreed its negotiating position, with the European Parliament due to vote on its own position in October, though at the time of writing agreement is not certain. Once both co-legislators have finalised their respective positions, inter-institutional negotiations will commence with a view to finding a common agreement.

Many countries have brought into force legislation to implement the "Stop-the-Clock" elements of the Omnibus Directive, providing certainty to reporters in waves 2 and 3 of CSRD (large companies/groups and listed SMEs) that they will not have to report in the next two years, as originally expected.

• ESRS: Separately, simplified drafts of the European Sustainability Reporting Standards (ESRS), published in July, would reduce the number of datapoints to be reported under CSRD. The public consultation on these drafts is now closed.
  
  
• US/EU Framework Agreement:  In August 2025, the United States and the European Union announced a Framework Agreement on Reciprocal, Fair, and Balanced Trade. As part of this Framework Agreement, the EU has committed to ensuring that CS3D and CSRD will not unduly restrict transatlantic trade, and it will work to address US concerns regarding the imposition of CS3D requirements on companies of non-EU countries. For our analysis of the "Washington effect" currently influencing EU policymaking, see our  briefing.
  
  
• More on Omnibus:  The European Commission's simplification agenda is in full swing, with further Omnibus proposals published for the batteries, chemicals, environment and circular economy sectors; in September 2025, the European Commission unofficially announced its intentions to pursue a further one year delay to the application of the Deforestation Regulation, allegedly on account of IT issues.
  
  
• UK SRS: The UK Government recently  consulted on the adoption of new UK Sustainability Reporting Standards (UK SRS), based closely on the ISSB framework, and the assurance of sustainability-related financial disclosures.

The adoption of the UK SRS will be the first step, with any reporting in line with the adopted standard begin initially voluntary, expected to be followed by mandatory requirements, with the UK's Financial Conduct Authority (FCA) expected to consult on mandatory reporting for listed firms, and the UK Department for Business and Trade also expected to consult on mandatory reporting by "economically significant entities", potentially before year-end.

The UK Government has proposed very few changes to the underlying ISSB standards, e.g. for the first two reporting periods, entities may choose to disclose under only S2 and not S1 (i.e. "climate first reporting"). With the consultation now closed, voluntary standards are expected to be released in due course.

• UK sustainability assurance regime: The consultation package also covered the development of a regime for assurance of sustainability-related disclosures, with the FRC consulting on a draft UK version of the International Auditing and Assurance Standards Board's ISSA 5000 standard on general requirements for sustainability assurance engagements. The UK Government has not yet decided whether mandatory reporting under UK SRS would be subject to assurance, highlighting on the one hand the increased confidence that this may provide for investors, and on the other hand the significant costs associated with obtaining assurance.
  
  
• Climate transition plans: Finally, the UK Government is also consulting on how they should fulfil their election manifesto of mandating UK-regulated financial institutions – including banks, asset managers, pension funds, and insurers – and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement. The broad consultation discusses several options ranging from the manageable “comply or explain" option, to a very challenging "adopt and implement" option. It is not yet clear when the UK Government will provide more detail.

For more information about these consultations, see our  briefing.

ESG timeline

Stay on top of recent and expected UK and EU legal and regulatory developments on ESG, filtered according to business type and ESG theme.

Explore: ESG timeline | Travers Smith

2. Further amendments to the EU Carbon Border Adjustment Mechanism (CBAM)

The proposals to amend the CBAM were discussed in our  previous edition of the UK Legal Update and our related  briefing. In June 2025, the European Parliament and Council of the EU reached a political agreement on the proposal, which must now be formally endorsed by both co-legislators before it can enter into force.

The European Commission has also launched a public consultation and call for evidence on extending the scope of the CBAM to cover downstream products. The future proposal also seeks to introduce anti-circumvention measures and clarify rules around the calculation of actual emissions for electricity used in the production process. The consultation closed on in August 2025 with a firm proposal expected in Q4 of 2025.

3. New 'failure to prevent fraud' offence

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.

ESG Toolkit

An evolving range of practical tools, solutions and resources to help your organisation define and achieve its ESG strategy.

Find out more: ESG toolkit | Travers Smith

Out now! ESG Circular

New for Autumn 2025, our ESG Circular delivers clear-cut market insights and engaging perspectives, to help you navigate your ESG strategy through a pragmatic legal lens. Read the  first issue here and follow  Travers Smith on LinkedIn to subscribe.

14 UK tax

1. Coming up: the Autumn Budget 2025

The UK Autumn Budget will be delivered on 26 November 2025. The UK Chancellor faces significant economic challenges, including a highly volatile geoeconomic climate, slow economic growth, and elevated net debt and her policy choices are restricted both:

• fiscally–by her two 'non-negotiable' fiscal rules, and
  
  
• politically–by the UK Labour Government's  2024 Manifesto pledge not to raise income tax, employee National Insurance Contributions (NICs), or VAT: collectively the three biggest revenue-raising levers available.

The UK Chancellor will seek to balance any additional borrowing and spending cuts, with tax policy changes that together encourages growth, and maintains confidence, in the economy. Against this backdrop, speculation is rife that a broad array of revenue raising tax changes is under consideration by the UK Treasury. For more detail on speculated measures, visit our UK  Budget Tracker.

2. UK Spring Tax Update 2025: in brief

Following commitments made at  Autumn Budget 2024 (and in its  Corporate Tax Roadmap – for more on which see:  UK Legal Update - Spring 2025 | Travers Smith), the UK Government announced a package of measures aimed at simplifying the tax system.

For the benefit of businesses based in the UK or those with UK operations, here's a brief overview of the measures which were announced:

Transfer pricing

Draft legislation (for inclusion in Finance Bill 2025-26) has been published that will:

• Narrow the regime by exempting most UK-to-UK transactions
• Widen the regime by expanding the 'participation condition'
• Align the interpretation of the UK rules with the OECD Transfer Pricing Guidelines, and
• Make it easier for HMRC to make transfer pricing determinations.

In addition, HMRC published a  consultation that proposed two additional changes to the UK's transfer pricing regime:

• First, to limit the current exemption from transfer pricing for small and medium-sized enterprises (SMEs) to small entities only, bringing medium-sized enterprises into scope, and
• Second, to introduce a new reporting requirement for certain cross-border related party transactions.

Permanent establishment

Draft legislation (again for inclusion in Finance Bill 2025-26) has been published that will amend:

• The UK's domestic law definition of permanent establishment to align it more closely with the definition used in the  OECD Model Tax Convention, and
• The application of the 'investment manager exemption' to both expand its scope to cover a wider range of investment transactions and remove Condition D (the 20% test).

The intention is to make the law in this area easier to understand. It is important to emphasize that the changes only apply to the UK's domestic rules; they do not affect the application of any of the UK's existing double tax treaties.

Diverted profits tax (DPT)

As part of the overall package of changes to the UK's transfer pricing regime,  draft legislation has been published to repeal the DPT. However, the 'essential features' of DPT will be preserved in a new corporation tax charge on 'unassessed transfer pricing profits' (UTPP). This represents a welcome simplification and should have the bonus of bringing some clarity to the application of double tax treaties in this area.

Modernisation of the stamp taxes on shares

The UK Government has also published its response to the 2023  Stamp Taxes on Shares modernisation consultation. It has confirmed that stamp duty, and stamp duty reserve tax (SDRT), is to be replaced with a single, self-assessed, tax on securities, to be administered online. It is anticipated that the new tax will be introduced in 2027. Draft legislation has not yet been published.

3. UK HMRC increases VAT recovery for defined benefit (DB) pension investment costs

In June this year, the UK Government increased the availability of input tax recovery for DB pension schemes' investment costs with immediate effect. However, the extent of the good news will remain unclear until the associated guidance is published (scheduled to occur “by autumn 2025”).

Until the recent change in policy, HMRC's position meant that it was far easier for UK employers to recover input tax on costs relating to the administration of DB pension schemes than on investment costs relating to management of the scheme's assets. Input tax on administration service costs could be recovered by the employer as a business overhead, provided the VAT invoice was addressed to it - even if the pension fund trustee contracted and paid for the relevant services. However, the position has been significantly more difficult for input tax on investment costs. Broadly, HMRC took the view that these investment costs relate to the trustee's management of the pension fund assets rather than the employer's business. This meant that only a proportion of the input tax could be treated as an overhead of the business and even to achieve that it was necessary to use certain structuring methods e.g. bringing the trustee into the employer VAT group.

The policy change is, therefore, a welcome reform for taxpayers. However, important detail remains outstanding. In particular, whether it will be necessary to continue to use the traditional structuring methods (such as bringing the trustee into the employer VAT group) to allow all the input tax on investment costs to be treated as an employer overhead or whether (as is the case with administration fees) it will be sufficient for employers to hold a valid VAT invoice in respect of the supply, even if the trustee contracts for and pays for the service.

For more detail, please see our  briefing.

4. G7 Statement on Global Minimum Taxes

On 28 June, the G7 published a  statement outlining a high-level political understanding on how the G20/OECD Pillar Two global minimum tax might interact with the U.S. system.

Pillar Two seeks to ensure that large multinationals enterprises pay an effective tax rate of at least 15% in each jurisdiction where they operate. Pillar Two operates through a combination of rules that, in certain circumstances, allow additional tax to be levied on a subsidiary of a multinational that has undertaxed profits in a different jurisdiction.

Many jurisdictions (including the UK and the European Union) have already introduced legislation to implement Pillar Two. By contrast, the US has been reluctant to implement the rules. The current Administration has argued that Pillar Two is discriminatory because it disproportionately targets US parented groups. The situation deteriorated further with the inclusion of section 899 in the House version of the One Big Beautiful Bill (OBBB). Section 899 was designed to allow the imposition of retaliatory US tax measures on any investor from any country that has implemented "unfair foreign taxes", including Pillar Two (alongside both Digital Services Taxes and Diverted Profits Taxes).

According to the G7 statement, a side-by-side system has been agreed (in principle) whereby (a) the domestic and foreign profits of US parented groups will be fully excluded from the application of Pillar Two rules, in exchange for (b) the removal of section 899 from the final Senate version of the OBBB.

The G7 agreement was broadly welcomed but progress on formalising a high-level political understanding into detailed rules that are acceptable to the full membership of the OECD/G20 Inclusive Framework has been difficult and faces significant hurdles.  Speculation continues that if a formal agreement is not reached "quickly", section 899 could be revived.

For more detail and analysis of the wider implications, see:  our briefing on transatlantic tax policy and the art of the deal.

5. New UK HMRC registration requirement for financial institutions under CRS/FATCA

The UK has recently amended its rules relating to the implementation of the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA). Broadly, under these rules, "financial institutions" are required to provide details of their non-resident account holders to the UK's HMRC.

One aspect of the recent amendments is the introduction of a requirement on most financial institutions to register with HMRC by 31 December, even if they have no accounts to report. The registration requirement is a one-off process with which relevant financial institutions will need to comply.

Private capital (and other financial services) businesses should review the status of their various entities to assess whether they are affected by the new registration requirement.

6. New UK carried interest tax regime: more detail provided

Over the summer, the UK Government provided additional detail, including  draft legislation, in relation to the UK's new regime under which, from 6 April 2026, all carried interest will be taxed as trading income, but with a bespoke effective rate of around 34.1% available for so-called "qualifying carried interest".

Helpfully, we now know that there will only be one requirement that carried interest must meet to be "qualifying" – with the UK Government not taking forward the other proposed requirements.

The single condition for "qualifying" status is that the carried interest must not be (what is currently called) income-based carried interest (IBCI). Broadly, carried interest will be at least partly IBCI unless the underlying fund has a weighted average holding period for its assets of at least 40 months. Currently, the IBCI rules do not apply to employees, but that exclusion will be removed under the new regime. However, in better news for taxpayers, amendments will be made to make it easier for carried interest not to be IBCI, in particular, in relation to private credit, fund of funds and secondary strategies.

In a welcome UK Government concession, the draft rules include some limitations for non-residents. However, the new regime is likely to generate complex international issues, especially in relation to jurisdictions that don't recognise the UK's categorisation of the carried interest as a trading profit.

For more detail, please see our  briefing.

7. Development in the "salaried members" BlueCrest case: permission to appeal to the UK Supreme Court

As we discussed last spring, under the UK's salaried members rules, a member of a UK LLP can be treated as an employee rather than self-employed for tax purposes, such that employers' NIC and PAYE obligations arise. Broadly, the regime will not apply if the individual has any of three facets of true partner-like status, including "significant influence" over the LLP.

In January, the UK 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. Indeed, the need for the influence to be derived from the members' legal rights and duties goes further in narrowing the concept than even HMRC contended.

However, there may be another twist in the saga, as BlueCrest  has been granted permission to appeal to the Supreme Court, with the hearing expected later this autumn.

As we await the Supreme Court's view, most firms are adopting a wait and see approach. An exception to this is those relying solely on "significant influence" to prevent the salaried members rules applying – with many of those revisiting their LLP deeds to ensure that the influence is properly embedded in the legal rights and duties of the members.

For more detail, please see our  briefing on the UK's Court of Appeal decision.

8. The challenge of rising employment costs in the UK

April's increase in UK employer's National Insurance contributions (NICs) to 15% is just one of the reasons for UK businesses seeking cost effective ways of rewarding and incentivising their workforce. Employers in the UK could consider using incentive structures to reduce their exposure to the employer's NICs rise including through salary sacrifice arrangements, providing tax-advantaged share incentives and/or transferring the employer's NICs on option gains to employees.

An effective salary sacrifice arrangement requires careful structuring and for information on how to do this please see our  article.

Incentives that are taxed as capital gains still have the advantage of lower headline rates (currently 18% and 24% for basic and higher rate taxpayers respectively) and, importantly, do not attract National Insurance contributions or Apprenticeship Levy. Although the annual gains a person can make before paying capital gains tax has dropped to £3,000, capital treatment still offers other exemptions and cash-flow advantages. Qualifying Enterprise Management Incentives (EMI) continue to benefit from lower capital gains tax rates (currently 14%).

At the time of publication, we are anticipating the UK Autumn Budget and, although the UK Chancellor has restated the UK Government's commitment not to raise taxes on "working people", it seems nothing is currently off the table. For example, there have been suggestions that, at some point in the future, the UK Government should consider limiting the employer's NICs relief on salary sacrifice arrangements for pension contributions.

9. The rise of the cross-border worker

Multi-jurisdictional working is here to stay. Tax and social security agreements haven't necessarily kept pace with this development and, as a result, the tax and social security liabilities of cross border workers can be very complex. The UK has tax treaties with many jurisdictions but the same cannot be said for social security. However, earlier this year, the UK Government announced that it would be expanding its network of reciprocal agreements by entering into a new social security agreement with India.

Having workers in multiple jurisdictions not only complicates the tax and social security position, it also creates additional administrative burdens for businesses. The UK tax authorities are trying to alleviate these by introducing more online notification systems and publishing additional guidance on areas of uncertainty. For example, the process for operating PAYE on employees with non-UK income has been modernised. Previously, employers would apply to HMRC for what were known as s690 directions to only operate PAYE on the income relating to an individual' UK duties. However, employers would not be able to do this until they had received written authorisation from HMRC (which could take some time). On 6 April this year, a new annual online notification system was introduced which allows businesses to operate PAYE on a modified basis as soon as the application has been acknowledged by HMRC. It is important to note that any s690 directions issued before 6 April 2025 ceased to have effect from that date and needed to be refreshed. Further, unlike the previous system, a new notification needs to be sent for each tax year the modified PAYE basis is to apply.

NICs guidance for internationally mobile workers: HMRC recently updated its guidance on NICs for internationally mobile workers. Where a person spends part of their time working in the UK, a question arises over whether UK NICs are payable on their earnings. If there is a social security agreement in place between the UK and the individual's home state, this will usually determine which jurisdiction can levy social security contributions (sometimes for a fixed period of time). However, where no such agreement exists or the period of coverage has ended, there has historically been some uncertainty as to whether UK NICs are due on (i) all the individual's earnings (if they are within the UK social security net at that time) or (ii) only those earnings relating to duties performed when they were within the scope of the UK NICs. HMRC has now confirmed that it considers the second approach to be the correct one. This means that if an employee and employer were liable for NICs when the duties were carried out, NICs will be due on any payment relating to those duties (such as a bonus) even if it is made at a time when the employee is outside the UK social security net and vice versa. It is important to note that HMRC has stated it will apply its interpretation retrospectively, inviting taxpayers to correct historic records for the last 6 years. There is currently a debate as to whether HMRC's interpretation is right (or would need a change in legislation) and employers are recommended to seek professional advice before amending historic payroll submissions.

For information on global mobility please visit our dedicated  Global mobility web page.

10. PISCES – a new opportunity for UK private company share plans

For general information on the new trading platform, PISCES,  see section 10 (Equity capital markets).

PISCES could offer participants in private company share plans an opportunity to realise their investment in the company even where there is no traditional exit (such as a sale or flotation) in prospect. If you are a private company adopting a new share plan, it is worth considering whether and how PISCES might fit within the plan rules. This is particularly the case with tax-advantaged share plans where the drafting requirements are quite prescriptive. For example, you might want to think about creating an exercise event for share awards if a PISCES trading window is opened. If you already operate tax-advantaged EMI or Company Share Option Plans (CSOP), you should be aware that for a limited period of time, existing awards can be amended to permit exercise during a PISCES trading event, provided certain conditions are met.

11. Labour supply chains – new PAYE liabilities for hirers

If you hire workers through a third party (such as an employer of record or an umbrella company), you need to be aware of new PAYE rules that will take effect from next April.

The UK Government acknowledges that engaging workers in this way offers businesses a flexible and cost-effective means of managing their labour requirements. However, it has also become aware of several cases where the third party employing the worker doesn't meet its PAYE and NICs obligations. Under the new rules, businesses using these hiring structures will become jointly responsible for the PAYE and NICs due on the worker's wages. This means that in cases of error or a failure to pay the correct amount of tax, HMRC can seek recovery from either the third party or (in certain cases) the client that uses their services. The new rules will apply to payments made on or after 6 April 2026 and will apply to existing and new arrangements.

Earlier this year HMRC updated its online "Check Employment Status for Tax" (CEST) tool and related guidance. Companies can use this service to help it decide whether the off-payroll rules (or "IR35" as it is often known) apply. Although the changes to CEST do not significantly alter the basis on which a status determination is made, they are designed to reflect recent case law and seek to reduce the number of cases in which the CEST tool is unable to make a determination.

Given these developments, and the fact that HMRC has won a number of recent employment status cases, companies need to ensure they have the correct internal processes for monitoring their worker supply chains and the appropriate documentation in place.

12. Share plans and leavers – the importance of process

When an individual's employment ends, the impact this will have on their share incentive awards will generally be governed by the relevant plan rules. These might cover a variety of situations depending on the circumstances of the employee's departure.

For example, someone considered to be a "good leaver" (someone who leaves in good circumstances) might be able to keep their awards for a period of time after employment, whereas a bad leaver might lose them. Quite often, to give companies the maximum amount of flexibility, the grantor will have the discretion to decide whether (and to what extent) the leaver can keep their awards.

In a group situation, practical difficulties can arise where the employer of the leaver negotiating the terms of any exit is different to the entity that granted the option (and has the power to exercise any discretion).

A recent case has shown that, in certain circumstances, the UK courts are willing to uphold an individual's claim to share awards where they were assured they could keep them even though the process set out in the plan rules was not followed. It is easy to see how this can happen, and the case stresses the importance of employers and grantors communicating over leavers and ensuring that the procedure in the plan rules has been followed and documented and notified to administrators.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.