Tax

On 25 March 2026, the Department for Business and Trade published its consultation on implementing a UK corporate re-domiciliation regime, a mechanism that would, for the first time, allow a foreign-incorporated company to change its place of incorporation to the UK whilst preserving the company’s existing legal identity. This consultation is the next step in a process that started in October 2021. Following a positive response to the initial consultation, an independent expert panel (the “Panel”) was set up in December 2023 with the purpose of determining how best to achieve re-domiciliation. The Panel’s report was published in October 2024, and the 2026 consultation considers the Panel’s recommendations. Although the consultation is concerned primarily with the company law framework, the tax consequences of the regime will be central to its attractiveness in practice, and the Government has invited views on the key tax considerations arising from re-domiciliation, including entry charges and asset rebasing, the treatment of pre-arrival losses, corporate residence, treaty access, and the application of stamp duty and stamp duty reserve tax (“SDRT”). The consultation, which closes on 19 June 2026, does not contain draft tax legislation and the Government has not committed to a “go-live date”.

The inward-only regime

A key feature of the regime is that it is inward-only: foreign companies may re-domicile to the UK, but UK companies may not re-domicile out. This is a deliberate policy decision, as a majority of respondents to the 2021 consultation, and the Panel itself, favoured a two-way regime. The Government acknowledged that a two-way framework might make the UK more attractive to companies considering re-domiciliation, by offering flexibility. However, it concluded that the potential drawbacks of allowing companies to leave the UK outweigh the benefits and elected instead to “prioritise growth” by only allowing inward re-domiciliation. From a tax perspective, the absence of an outward regime means that the Panel’s proposed exit charge framework is no longer relevant. It also means that a company re-domiciling to the UK should assume it cannot migrate out again, and that the stamp duty and SDRT consequences of bringing shares within the UK stamp tax perimeter (discussed below) are, for practical purposes, permanent.

Stamp duty / SDRT

UK Stamp duty and SDRT will be relevant to transfers of shares in a company which has re-domiciled to the UK. The act of re-domiciliation itself should not trigger a charge, provided there is no transfer of shares. However, for foreign-incorporated companies currently listed in the UK via depositary interests (“DIs”), the transition from DIs to directly listed UK securities raises a specific question about whether a double SDRT charge could arise. The Government’s working assumption is that it would not as the DIs would be cancelled and new securities issued, but it is inviting views in this regard. The applicability of UK stamp taxes to any re-domiciled company could be a deterrent to some companies considering the regime.

Corporate residence and treaty access

Under existing UK tax law, a company is resident for tax purposes in the UK either through incorporation in the UK or through being centrally managed and controlled in the UK (even if incorporated elsewhere, meaning that a company incorporated abroad will only be UK tax resident if its central management and control is exercised in the UK). A re-domiciled entity, which is not already a UK tax resident, will be treated as UK tax resident from the date Companies House issues a certificate of re-domiciliation. The practical complication is the dual-residence window that may arise between registration in the UK and de-registration in the departing jurisdiction. Where the relevant double tax treaty incorporates the Multilateral Instrument’s mutual agreement procedure-based tiebreaker, the resolution of dual residence will depend on a competent authority process, introducing uncertainty as to the precise date on which UK-only residence is established. As to treaty access more broadly, it is worth noting that the UK’s extensive treaty network is available to any company that is UK tax resident, whether or not it is UK-incorporated. A company that is already UK tax resident can claim treaty benefits without re-domiciling. Re-domiciliation does not, therefore, necessarily expand the scope of treaty access; its effect is to establish UK tax residence on the basis of incorporation rather than management and control, which may be more straightforward to evidence but does not unlock any additional treaty entitlement.

No entry charge – market value rebasing and use of losses

The regime’s central principle is that re-domiciliation should not give rise to a UK tax charge. For assets brought within the UK corporation tax net, the Panel proposes a default market value rebasing across all asset classes (including loan relationships and derivative contracts). This is a deliberate departure from the existing position for companies migrating tax residence without changing incorporation and the approach to loan relationships and derivative contracts may be particularly complicated as often tax on these assets follows the accounting treatment. The Panel acknowledges that extending market value rebasing to financial instruments “may not be straightforward” but favoured consistency in its approach. The Panel also recommended denying relief for pre-re-domiciliation losses and imposing a post-re-domiciliation group relief surrender restriction period, the length of which remains unspecified.

Does re-domiciliation actually deliver a tax benefit?

The Government’s consultation emphasises that the regime would be “particularly attractive” to companies wishing to access UK-specific tax regimes, including, for example, the QAHC regime. However, the QAHC regime does not require UK incorporation; it requires only UK tax residence. The result is that, for a company already UK tax resident (under the UK central management and control test), re-domiciliation may not unlock significant new tax regimes but does add a stamp duty cost. That potential downside may give companies reason for pause when considering whether re-domiciliation is the best means of achieving UK tax residence.

However, tax is only one in a list of factors companies are expected to consider when deciding whether to re-domicile. The consultation states that “a significant portion of demand for a re-domiciliation regime is likely to come from multi-national corporations wishing to re-structure their group, predominantly moving blocks of intermediate holding companies to the UK”. Time will tell whether this is accurate.