The move will affect the largest digital multinationals like Amazon, Google and Meta, with their liability for diverted profits tax moving into the corporation tax regime. A date for the new measure has not been confirmed but it is likely to start from April 2026.

The new framework will retain the basic features of the diverted profit tax regime, which was introduced on 1 April 2015 and is charged at the equivalent of 31% of the diverted profit.

This tax raised £1.78bn in the 2023-24 tax year, up from £1.16bn in 2018-19, while there are 128 enquiries outstanding.

The plan is to create a new charging provision for unassessed transfer pricing profits (UTPP) within corporation tax at Part 4A Taxation (International and Other Provisions) Act 2010 (TIOPA 2010).