UK Transfer Pricing: Rules, Records and the One-Way Adjustment
In the United Kingdom, a company that buys from, sells to or finances a connected business abroad must price those transactions as independent parties would, and Part 4 of the Taxation (International and Other Provisions) Act 2010 is the statute that carries the UK transfer pricing rule. The same Part sets the direction of any correction: an adjustment may raise UK taxable profit or reduce a UK loss, and the legislation allows nothing the other way.
That asymmetry is what an Indian parent with a UK subsidiary should plan around. The UK company bears the adjustment on its own. It does not shrink because the Indian side priced the same transaction at arm's length, and it does not wait for the Indian side to agree.
This profile follows the question order of our India country profile: the arm's length rule, the exemption for smaller enterprises, the records HMRC can ask for, country-by-country reporting, the one-way adjustment, and the 2026 reform. A closing section turns to what the Indian parent has to hold at the same time.
Key takeaways
The arm's length rule sits in Part 4 TIOPA 2010, and the 2026 reform directs that it be interpreted in accordance with OECD principles.
Small and medium-sized enterprises stay outside the charge: 50 staff and €10 million at the small limb, 250 staff and €50 million of turnover or €43 million of balance sheet total at the medium-sized one.
A UK entity in a group above the €750 million threshold prepares a master file and a local file to the 2022 OECD Guidelines for corporation tax periods from April 2023, as HMRC's records manual sets out.
The adjustment runs one way, so a UK enquiry is answered with the file.
The CbC report is due 12 months after the period ends, and the international controlled transactions schedule is expected to start with the period beginning 1 January 2027.
The UK's arm's length rule and the OECD Guidelines
The arm's length provision sets no price of its own. Where the actual terms of a transaction differ from the terms independent parties would have agreed, UK taxable profit is computed as it would have been on an arm's length basis. HMRC's guidance describes the treatment in its own words: such transactions are "treated by reference to the profit that would have arisen if the transactions had been carried out under comparable conditions by independent parties".
That reaches the ordinary traffic of a group: goods sold between affiliates, services charged across a border, royalties for the use of intangibles, guarantees and interest on an intercompany loan. HMRC's guidance also confirms that the legislation "applies to transactions between any connected UK entities", so domestic connected transactions have been within the charge too. The 2026 reform takes most of those out again, and that change is set out further down.
The reform adds a direction on how the statutory words are to be read. The policy paper of 26 November 2025 provides for "interpretation in accordance with Organisation for Economic Co-operation and Development (OECD) principles", which ties the UK rule to a text the OECD revises, not to a schedule fixed in 2010. For a UK company, the 2022 Transfer Pricing Guidelines therefore carry the weight of the position taken in the return.
Nothing in the system pre-approves that position. The return is a self-assessment, and the company asserts the price it has used. HMRC forms a view afterwards, which is why the file has to exist at the point of filing instead of being assembled in answer to a question.
The India transfer pricing country profile asks the same questions in the same order, so the two can be read side by side. The Indian rule and the UK rule reach the same transactions, and they reach them with different machinery.
The participation condition and the SME exemption
Connection for these purposes is not a matter of shareholding arithmetic. The participation condition is met where one person participates in the management, control or capital of the other, or where the same person participates in both. A UK subsidiary of an Indian parent meets it, and so do two UK companies under common control.
Section 166 of TIOPA 2010 displaces the charge for SMEs. Size decides, and the legislation measures size in staff and in one of two financial figures.
Limb | Staff | Financial test |
|---|---|---|
Small enterprise | No more than 50 | Annual turnover or balance sheet total of less than €10 million |
Medium-sized enterprise | No more than 250 | Annual turnover of less than €50 million, or a balance sheet total of less than €43 million |
Source: HMRC, Transfer pricing: transactions between connected companies.
Take a UK company with 40 staff, €30 million of turnover and a balance sheet total of €40 million. It is outside the small limb, because both financial measures sit above €10 million, and inside the medium-sized limb, because its headcount is under 250 and its turnover is under €50 million.
The exemption survived the 2025 consultation. The government's summary of responses, published on 26 November 2025, records that "the government has decided that SMEs will continue to benefit from the existing exemption from transfer pricing". Guides written while the consultation was open still describe the exemption as subject to change, and that reading is out of date.
The exemption removes the pricing charge for a qualifying company, and HMRC's manual reads transfer pricing evidence into the general records duty unless an exemption of this kind applies. Size is a question about the company in front of HMRC, and the records question below is a question about the group it belongs to. The two answers can point in different directions.
The records a UK entity must keep and produce
Record-keeping runs on two layers, and they are separate duties. The first is general: a company within the charge keeps what is needed to make and deliver a correct and complete return, under paragraph 21 of Schedule 18 to the Finance Act 1998 for corporation tax and section 12B of the Taxes Management Act 1970 for income tax. The second layer is specific, and it comes from the Transfer Pricing Records Regulations 2023.
The specified records are a master file and a local file. HMRC's manual on the records requirement sets out both: the master file follows Annex I to Chapter V of the OECD Transfer Pricing Guidelines approved on 20 January 2022, the local file follows Annex II, and the duty runs for corporation tax to accounting periods beginning on or after 1 April 2023, with income tax following from the 2024 to 2025 tax year.
The group sets the scope. A UK entity is inside the regulations when it is a member of a multinational group that meets the CbCR threshold for the period, and the next section shows where that threshold sits.
Once inside, the file is part of the statutory records. It is available to HMRC on request.
HMRC expects the file to be reviewed annually at a minimum, with a finalised set for each period, even where nothing changed. Where the UK entity has no material controlled transactions, or the only material ones fall within the UK-to-UK or advance pricing agreement exemptions, the regulations do not require the specified records; documentation reasonable enough to show an arm's length position still is.
Failure carries its own penalty. HMRC's manual on the records penalty states that a penalty of up to £3,000 may be charged for each failure to keep or preserve adequate records in respect of a return, and the specified transfer pricing records fall inside that provision. The same page joins the missing file to the inaccuracy: where records are absent, "the behaviours associated with that inaccuracy will be presumed to be careless unless the relevant person can demonstrate that they took reasonable care to avoid the inaccuracy".
The United States transfer pricing country profile covers the same ground from the other side, where the file is built to a penalty-protection standard set by statute. The UK construction is different. The regulations name the documents, the duty follows group size, and the sanction sits on the failure to keep them.
Country-by-country reporting and the records it triggers
A UK resident ultimate parent of a multinational group above the threshold files a country-by-country report with HMRC for each period. HMRC's manual on the filing obligation gives the deadline as 12 months after the end of the period the report relates to, and records that where the ultimate parent's jurisdiction has implemented a threshold that is a near equivalent of €750 million in domestic currency as at January 2015, the group is not required to file a UK CbCR at all.
That €750 million figure is the hinge for more than the report. The two specified documents attach to a UK entity whose group meets the same revenue test, so both obligations come through one door. A group under the threshold has neither obligation, and the company is left with the general records duty and the arm's length rule. Above it, the file and the report have to tell the same story, because both describe one group.
The Indian counterpart turns on a different hinge. India's country-by-country report sits in Forms 58 to 60 beside a master file in Form 56, and those filings attach to the Indian entity that has international transactions. The UK's attach to a group that crosses a revenue threshold, which means a UK entity can be inside the regulations in a year when its own transactions are modest.
The one-way adjustment: profit can rise, never fall
HMRC's guidance states the limitation in one sentence: "The UK legislation allows only for a transfer pricing adjustment to increase taxable profits or reduce a tax loss." The sentence that follows closes the other direction, because it is not possible to decrease profits or increase a tax loss.
Work that through a group. Suppose the UK company has paid too much to its Indian parent for services, so the UK cost is above what independent parties would charge. The correction raises UK profit, while the Indian parent has booked the matching receipt on terms that may be right in India.
Nothing in the UK adjustment reduces that charge, and no part of it is set against another period in which the pricing ran the other way. That changes what an adjustment is. Where the charge can move in both directions, an adjustment recalculates a shared number. In the UK it is a charge that lands on one entity and stays there.
The answer is to show that the price was set on arm's length terms at the time, which is a documentary exercise decided on what the company held when it filed.
The penalties follow the same line. HMRC's manual on the records penalty puts a cap of £3,000 on a failure to keep the specified records and preserve them, charged per failure and not as a share of the tax. Where the inaccuracy itself is assessed, paragraph 3C of Schedule 24 to the Finance Act 2007 provides that the behaviour behind it is presumed careless unless the company can demonstrate reasonable care, and the same manual confirms that careless behaviour carries a penalty. A missing file turns a defensible pricing decision into an exposed one.
An argument about symmetry is a treaty argument, and it belongs in the mutual agreement procedure with both competent authorities engaged. The file decides whether the UK charge lands at all, and it decides how the penalty is computed when it does.
What changed from 1 January 2026, and what starts in 2027
The reform package published on 26 November 2025 applies to chargeable periods that begin on or after 1 January 2026. It creates a charging provision for Unassessed Transfer Pricing Profits within corporation tax, which takes over the ground diverted profits tax held. It also repeals the requirement to apply transfer pricing to UK-to-UK transactions, described in the summary of responses as "the general repeal of the requirement to apply transfer pricing to UK-to-UK transactions".
The SME exemption was kept, so the 2026 rules reach the same population as before on that point. For a UK subsidiary of a large Indian group, the practical changes are the OECD direction on interpretation and the loss of the domestic charge, while the group threshold still answers the documentation question.
The 2027 date is about reporting. HMRC's summary of responses records that the international controlled transactions changes are expected to take effect for accounting periods that open on or after 1 January 2027, which for a calendar-year group is the year beginning on that date. The data the schedule asks for, and the reason it changes what a transfer pricing team does in the months before a filing, are set out in our note on the international controlled transactions schedule and why reporting is moving from documentation to data.
Read as a sequence, the UK position for a period beginning in 2027 has three layers: the arm's length rule with its OECD direction, the group-threshold documentation, and a transaction-level schedule filed with the return. A master file that satisfies the second layer is the input to the third, and the schedule has to agree with the ledger.
What the Indian parent must hold at the same time
India's documentation attaches to the entity. Form 3CEB has accompanied the return, and from 1 April 2026 Form 48 replaces Form 3CEB and asks for the comparables and the margin range in its own parts. The master file goes in Form 56 and the country-by-country report in Forms 58 to 60, as the India profile sets out, with contemporaneous documentation behind all of it.
Set the two positions beside each other and the gap is visible. India's obligations attach to each entity with international transactions. The UK's attach to a group that crosses a revenue threshold. A UK subsidiary of a mid-sized Indian group can fall outside the regulations and still appear on the Indian side as the associated enterprise at the other end of the transaction.
The two systems meet in the mutual agreement procedure. A UK adjustment that the Indian side does not match is a double taxation question, and the India-UK treaty provides the route to the competent authorities. Article 13 of that treaty, on fees for technical services, has been before the Delhi High Court, and the Delhi High Court on Article 13 sets out what the make available test asks of a claim. That is a separate exercise from the transfer pricing file, and the two have to be run so that they describe the same transaction.
The asymmetry decides the order of work. The Indian file has to be able to support the price the UK entity charged, because a UK adjustment is not netted off in India by the same instrument. Building both files from one functional analysis is cheaper than reconciling them afterwards, and it is the shortest route to a file HMRC will accept.
The first step is a scoping check more than a document. Work out whether the UK entity's group crosses the €750 million threshold for the period, because that single test decides whether the company owes the master file and the local file at all. Then line the intercompany ledger against the local file's transaction categories: a category without a benchmark and a signed-off price is the exposure, and the one-way adjustment means the number only moves against the UK company.
Two dates to watch. The 2026 reform already covers most open UK periods, and the international controlled transactions schedule is expected to start with the period that opens on 1 January 2027. If you would like the UK file and the Indian file read together, contact us, and we will start with the group's threshold position.
Frequently asked questions
What is transfer pricing in the UK?
It is the price a UK company puts on goods, services, finance or intangibles passing to a connected business, and UK law requires that price to match what independent parties would have agreed. Part 4 TIOPA 2010 computes taxable profit on that basis, and HMRC can correct it where the terms differ.
What are the new transfer pricing rules in the UK?
The reform published on 26 November 2025 applies for chargeable periods beginning on or after 1 January 2026. It creates a corporation tax charge for Unassessed Transfer Pricing Profits, directs interpretation in line with OECD principles, and repeals UK-to-UK transfer pricing. The international controlled transactions schedule is expected from 1 January 2027.
What are the documentation requirements for UK transfer pricing?
A UK entity keeps records sufficient to make a correct return and, where its group crosses the CbCR threshold, prepares the specified documentation: a group master file and an entity local file, each following the OECD's 2022 transfer pricing guidance. Both form part of the statutory records and must be produced on request. That has applied to corporation tax accounting periods from April 2023.
What are the types of transfer pricing?
HMRC tests a price against the 2022 OECD Guidelines, which set out five methods: comparable uncontrolled price, resale price, cost plus, transactional net margin and profit split. Where none of them fits, another method can be used if it produces an arm's length result. The file has to show which method was chosen and why.
In the United Kingdom, a company that buys from, sells to or finances a connected business abroad must price those transactions as independent parties would, and Part 4 of the Taxation (International and Other Provisions) Act 2010 is the statute that carries the UK transfer pricing rule. The same Part sets the direction of any correction: an adjustment may raise UK taxable profit or reduce a UK loss, and the legislation allows nothing the other way.
That asymmetry is what an Indian parent with a UK subsidiary should plan around. The UK company bears the adjustment on its own. It does not shrink because the Indian side priced the same transaction at arm's length, and it does not wait for the Indian side to agree.
This profile follows the question order of our India country profile: the arm's length rule, the exemption for smaller enterprises, the records HMRC can ask for, country-by-country reporting, the one-way adjustment, and the 2026 reform. A closing section turns to what the Indian parent has to hold at the same time.
Key takeaways
The arm's length rule sits in Part 4 TIOPA 2010, and the 2026 reform directs that it be interpreted in accordance with OECD principles.
Small and medium-sized enterprises stay outside the charge: 50 staff and €10 million at the small limb, 250 staff and €50 million of turnover or €43 million of balance sheet total at the medium-sized one.
A UK entity in a group above the €750 million threshold prepares a master file and a local file to the 2022 OECD Guidelines for corporation tax periods from April 2023, as HMRC's records manual sets out.
The adjustment runs one way, so a UK enquiry is answered with the file.
The CbC report is due 12 months after the period ends, and the international controlled transactions schedule is expected to start with the period beginning 1 January 2027.
The UK's arm's length rule and the OECD Guidelines
The arm's length provision sets no price of its own. Where the actual terms of a transaction differ from the terms independent parties would have agreed, UK taxable profit is computed as it would have been on an arm's length basis. HMRC's guidance describes the treatment in its own words: such transactions are "treated by reference to the profit that would have arisen if the transactions had been carried out under comparable conditions by independent parties".
That reaches the ordinary traffic of a group: goods sold between affiliates, services charged across a border, royalties for the use of intangibles, guarantees and interest on an intercompany loan. HMRC's guidance also confirms that the legislation "applies to transactions between any connected UK entities", so domestic connected transactions have been within the charge too. The 2026 reform takes most of those out again, and that change is set out further down.
The reform adds a direction on how the statutory words are to be read. The policy paper of 26 November 2025 provides for "interpretation in accordance with Organisation for Economic Co-operation and Development (OECD) principles", which ties the UK rule to a text the OECD revises, not to a schedule fixed in 2010. For a UK company, the 2022 Transfer Pricing Guidelines therefore carry the weight of the position taken in the return.
Nothing in the system pre-approves that position. The return is a self-assessment, and the company asserts the price it has used. HMRC forms a view afterwards, which is why the file has to exist at the point of filing instead of being assembled in answer to a question.
The India transfer pricing country profile asks the same questions in the same order, so the two can be read side by side. The Indian rule and the UK rule reach the same transactions, and they reach them with different machinery.
The participation condition and the SME exemption
Connection for these purposes is not a matter of shareholding arithmetic. The participation condition is met where one person participates in the management, control or capital of the other, or where the same person participates in both. A UK subsidiary of an Indian parent meets it, and so do two UK companies under common control.
Section 166 of TIOPA 2010 displaces the charge for SMEs. Size decides, and the legislation measures size in staff and in one of two financial figures.
Limb | Staff | Financial test |
|---|---|---|
Small enterprise | No more than 50 | Annual turnover or balance sheet total of less than €10 million |
Medium-sized enterprise | No more than 250 | Annual turnover of less than €50 million, or a balance sheet total of less than €43 million |
Source: HMRC, Transfer pricing: transactions between connected companies.
Take a UK company with 40 staff, €30 million of turnover and a balance sheet total of €40 million. It is outside the small limb, because both financial measures sit above €10 million, and inside the medium-sized limb, because its headcount is under 250 and its turnover is under €50 million.
The exemption survived the 2025 consultation. The government's summary of responses, published on 26 November 2025, records that "the government has decided that SMEs will continue to benefit from the existing exemption from transfer pricing". Guides written while the consultation was open still describe the exemption as subject to change, and that reading is out of date.
The exemption removes the pricing charge for a qualifying company, and HMRC's manual reads transfer pricing evidence into the general records duty unless an exemption of this kind applies. Size is a question about the company in front of HMRC, and the records question below is a question about the group it belongs to. The two answers can point in different directions.
The records a UK entity must keep and produce
Record-keeping runs on two layers, and they are separate duties. The first is general: a company within the charge keeps what is needed to make and deliver a correct and complete return, under paragraph 21 of Schedule 18 to the Finance Act 1998 for corporation tax and section 12B of the Taxes Management Act 1970 for income tax. The second layer is specific, and it comes from the Transfer Pricing Records Regulations 2023.
The specified records are a master file and a local file. HMRC's manual on the records requirement sets out both: the master file follows Annex I to Chapter V of the OECD Transfer Pricing Guidelines approved on 20 January 2022, the local file follows Annex II, and the duty runs for corporation tax to accounting periods beginning on or after 1 April 2023, with income tax following from the 2024 to 2025 tax year.
The group sets the scope. A UK entity is inside the regulations when it is a member of a multinational group that meets the CbCR threshold for the period, and the next section shows where that threshold sits.
Once inside, the file is part of the statutory records. It is available to HMRC on request.
HMRC expects the file to be reviewed annually at a minimum, with a finalised set for each period, even where nothing changed. Where the UK entity has no material controlled transactions, or the only material ones fall within the UK-to-UK or advance pricing agreement exemptions, the regulations do not require the specified records; documentation reasonable enough to show an arm's length position still is.
Failure carries its own penalty. HMRC's manual on the records penalty states that a penalty of up to £3,000 may be charged for each failure to keep or preserve adequate records in respect of a return, and the specified transfer pricing records fall inside that provision. The same page joins the missing file to the inaccuracy: where records are absent, "the behaviours associated with that inaccuracy will be presumed to be careless unless the relevant person can demonstrate that they took reasonable care to avoid the inaccuracy".
The United States transfer pricing country profile covers the same ground from the other side, where the file is built to a penalty-protection standard set by statute. The UK construction is different. The regulations name the documents, the duty follows group size, and the sanction sits on the failure to keep them.
Country-by-country reporting and the records it triggers
A UK resident ultimate parent of a multinational group above the threshold files a country-by-country report with HMRC for each period. HMRC's manual on the filing obligation gives the deadline as 12 months after the end of the period the report relates to, and records that where the ultimate parent's jurisdiction has implemented a threshold that is a near equivalent of €750 million in domestic currency as at January 2015, the group is not required to file a UK CbCR at all.
That €750 million figure is the hinge for more than the report. The two specified documents attach to a UK entity whose group meets the same revenue test, so both obligations come through one door. A group under the threshold has neither obligation, and the company is left with the general records duty and the arm's length rule. Above it, the file and the report have to tell the same story, because both describe one group.
The Indian counterpart turns on a different hinge. India's country-by-country report sits in Forms 58 to 60 beside a master file in Form 56, and those filings attach to the Indian entity that has international transactions. The UK's attach to a group that crosses a revenue threshold, which means a UK entity can be inside the regulations in a year when its own transactions are modest.
The one-way adjustment: profit can rise, never fall
HMRC's guidance states the limitation in one sentence: "The UK legislation allows only for a transfer pricing adjustment to increase taxable profits or reduce a tax loss." The sentence that follows closes the other direction, because it is not possible to decrease profits or increase a tax loss.
Work that through a group. Suppose the UK company has paid too much to its Indian parent for services, so the UK cost is above what independent parties would charge. The correction raises UK profit, while the Indian parent has booked the matching receipt on terms that may be right in India.
Nothing in the UK adjustment reduces that charge, and no part of it is set against another period in which the pricing ran the other way. That changes what an adjustment is. Where the charge can move in both directions, an adjustment recalculates a shared number. In the UK it is a charge that lands on one entity and stays there.
The answer is to show that the price was set on arm's length terms at the time, which is a documentary exercise decided on what the company held when it filed.
The penalties follow the same line. HMRC's manual on the records penalty puts a cap of £3,000 on a failure to keep the specified records and preserve them, charged per failure and not as a share of the tax. Where the inaccuracy itself is assessed, paragraph 3C of Schedule 24 to the Finance Act 2007 provides that the behaviour behind it is presumed careless unless the company can demonstrate reasonable care, and the same manual confirms that careless behaviour carries a penalty. A missing file turns a defensible pricing decision into an exposed one.
An argument about symmetry is a treaty argument, and it belongs in the mutual agreement procedure with both competent authorities engaged. The file decides whether the UK charge lands at all, and it decides how the penalty is computed when it does.
What changed from 1 January 2026, and what starts in 2027
The reform package published on 26 November 2025 applies to chargeable periods that begin on or after 1 January 2026. It creates a charging provision for Unassessed Transfer Pricing Profits within corporation tax, which takes over the ground diverted profits tax held. It also repeals the requirement to apply transfer pricing to UK-to-UK transactions, described in the summary of responses as "the general repeal of the requirement to apply transfer pricing to UK-to-UK transactions".
The SME exemption was kept, so the 2026 rules reach the same population as before on that point. For a UK subsidiary of a large Indian group, the practical changes are the OECD direction on interpretation and the loss of the domestic charge, while the group threshold still answers the documentation question.
The 2027 date is about reporting. HMRC's summary of responses records that the international controlled transactions changes are expected to take effect for accounting periods that open on or after 1 January 2027, which for a calendar-year group is the year beginning on that date. The data the schedule asks for, and the reason it changes what a transfer pricing team does in the months before a filing, are set out in our note on the international controlled transactions schedule and why reporting is moving from documentation to data.
Read as a sequence, the UK position for a period beginning in 2027 has three layers: the arm's length rule with its OECD direction, the group-threshold documentation, and a transaction-level schedule filed with the return. A master file that satisfies the second layer is the input to the third, and the schedule has to agree with the ledger.
What the Indian parent must hold at the same time
India's documentation attaches to the entity. Form 3CEB has accompanied the return, and from 1 April 2026 Form 48 replaces Form 3CEB and asks for the comparables and the margin range in its own parts. The master file goes in Form 56 and the country-by-country report in Forms 58 to 60, as the India profile sets out, with contemporaneous documentation behind all of it.
Set the two positions beside each other and the gap is visible. India's obligations attach to each entity with international transactions. The UK's attach to a group that crosses a revenue threshold. A UK subsidiary of a mid-sized Indian group can fall outside the regulations and still appear on the Indian side as the associated enterprise at the other end of the transaction.
The two systems meet in the mutual agreement procedure. A UK adjustment that the Indian side does not match is a double taxation question, and the India-UK treaty provides the route to the competent authorities. Article 13 of that treaty, on fees for technical services, has been before the Delhi High Court, and the Delhi High Court on Article 13 sets out what the make available test asks of a claim. That is a separate exercise from the transfer pricing file, and the two have to be run so that they describe the same transaction.
The asymmetry decides the order of work. The Indian file has to be able to support the price the UK entity charged, because a UK adjustment is not netted off in India by the same instrument. Building both files from one functional analysis is cheaper than reconciling them afterwards, and it is the shortest route to a file HMRC will accept.
The first step is a scoping check more than a document. Work out whether the UK entity's group crosses the €750 million threshold for the period, because that single test decides whether the company owes the master file and the local file at all. Then line the intercompany ledger against the local file's transaction categories: a category without a benchmark and a signed-off price is the exposure, and the one-way adjustment means the number only moves against the UK company.
Two dates to watch. The 2026 reform already covers most open UK periods, and the international controlled transactions schedule is expected to start with the period that opens on 1 January 2027. If you would like the UK file and the Indian file read together, contact us, and we will start with the group's threshold position.
Frequently asked questions
What is transfer pricing in the UK?
It is the price a UK company puts on goods, services, finance or intangibles passing to a connected business, and UK law requires that price to match what independent parties would have agreed. Part 4 TIOPA 2010 computes taxable profit on that basis, and HMRC can correct it where the terms differ.
What are the new transfer pricing rules in the UK?
The reform published on 26 November 2025 applies for chargeable periods beginning on or after 1 January 2026. It creates a corporation tax charge for Unassessed Transfer Pricing Profits, directs interpretation in line with OECD principles, and repeals UK-to-UK transfer pricing. The international controlled transactions schedule is expected from 1 January 2027.
What are the documentation requirements for UK transfer pricing?
A UK entity keeps records sufficient to make a correct return and, where its group crosses the CbCR threshold, prepares the specified documentation: a group master file and an entity local file, each following the OECD's 2022 transfer pricing guidance. Both form part of the statutory records and must be produced on request. That has applied to corporation tax accounting periods from April 2023.
What are the types of transfer pricing?
HMRC tests a price against the 2022 OECD Guidelines, which set out five methods: comparable uncontrolled price, resale price, cost plus, transactional net margin and profit split. Where none of them fits, another method can be used if it produces an arm's length result. The file has to show which method was chosen and why.
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If you are evaluating cross-border expansion, restructuring, or strengthening compliance and audit readiness, we can help you plan and execute with clarity.