UK to miss out on £600m in tax due to US exemption, says HMRC
The UK is set to miss out on around £600 million in tax each year following a deal allowing the US to be exempt from a global tax commitment, according to HMRC figures.
It confirmed the expected tax reduction as part of scrutiny by Parliament’s Public Accounts Committee (PAC) into tax paid by major multinational firms in the UK.
The committee warned the UK tax authority must better tackle the large risk of global firms diverting their profits overseas and therefore shifting tax jurisdictions.
The PAC found HMRC’s approach to collecting tax from large businesses is “generally working well”.
However, it said there are still “significantly high” risks related to multinationals potentially diverting profits across borders.
Of the £70.1 billion of tax under consideration in 2025 as part of investigations into large businesses, HMRC estimates around £21 billion of this faces international risks.
The committee is therefore calling on the tax body to provide further insights on the risks involved and how it can better tackle potential issues.
It comes after a landmark international tax rate was agreed in January.
The deal saw nearly 150 countries agree to a 15% global minimum tax to stop large global companies shifting profits to jurisdictions with lower taxes.
However, the US will be exempt from the deal, with was finalised by the Organisation for Economic Cooperation and Development.
Nicole Newbury, director of large business compliance at HMRC, told the committee the US exemption from the Pillar 2 tax rule will have an impact on the UK’s tax income.
She said: “It has reduced the benefit – the additional tax that will be paid in the UK – by about £600 million a year.
“The forecast for what Pillar 2 will bring into the UK has now reduced to £1.6 billion a year, so there will be a monetary impact.”
Clive Betts MP, deputy chairman of the committee, said: “The UK still risks bleeding a significant amount of its tax take overseas through the cross-border diversion of multinationals’ profits over borders.
“HMRC should be bearing down on work to understand how companies are complying with new rules on international minimum rates for corporation tax, particularly in light of the parallel agreement with the US exempting their own companies from these rules.”
Published: by Radio NewsHub