UK: Implementation of Pillar Two delayed

Delayed to 31 December 2023 (from 1 April 2023)

Delayed to 31 December 2023 (from 1 April 2023)

The UK government today announced that the effective date of Pillar Two legislation in the UK will be delayed and will now first apply to accounting periods beginning on or after 31 December 2023.

Previously, it had been intended that the “Income Inclusion Rule” (IIR) would take effect in the UK from 1 April 2023 and the “Undertaxed Payments (or Profits) Rule” (UTPR) and the “Domestic Minimum Tax” would be introduced from 1 April 2024 at the earliest.  Today’s UK announcement does not make explicit reference to the UTPR or Domestic Minimum Tax;  HM Treasury would need to clarify the expected timelines for these.

The delay is in response to feedback received during the UK’s recent public consultation on the implementation of Pillar Two.  A common concern was the need for a sufficient lead-in time due to the complexity of the rules; the fact that there remain important policy and administrative issues to be discussed within the OECD Implementation Framework; and the need for businesses to take steps and build systems to be able to determine rule compliance.  In addition, there was concern that an early implementation by the UK ahead of other countries could put the UK at a competitive disadvantage. 


The rules under Pillar Two would establish a global minimum tax of 15% for multinational enterprises with a turnover of at least €750 million, effective from 2023. 

HM Treasury opened a public consultation on 11 January 2022 on the domestic implementation of Pillar Two. Read TaxNewsFlash

Comments were due 4 April 2022, and HM Treasury said that it expected to publish draft legislation in the summer of 2022.

What's next?

At this stage, tax professionals do not necessarily expect the legislative timetable to change.  Draft legislation in the summer of 2022 with “substantive enactment” of that legislation in the first quarter of 2023 remain a strong possibility.  Once substantive enactment of the legislation has occurred, the expected impact of the rules would need to be incorporated into timetables for UK financial reporting disclosures and businesses would need to be able to disclose the expected implications of Pillar Two as part of this.    

While observers believe the delay will be welcome for business, this delay merely provides a relatively short period of extra breathing space to progress and implement significant readiness projects.  Businesses need to continue to use the extra time effectively to determine that the impacts are fully assessed and managed, while process, compliance and system enhancements are implemented in time.

For more information, contact a KPMG tax professional in the UK:

Kashif Javed |

Matthew Herrington |


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