Anti-avoidance rule in relation to non-derecognition liabilities
Published 26 November 2025
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This publication is available at https://www.gov.uk/government/publications/anti-avoidance-rule-relating-to-certain-non-derecognition-liabilities/anti-avoidance-rule-in-relation-to-non-derecognition-liabilities
Who is likely to be affected
Companies using arrangements to secure a tax advantage in certain situations where assets have been transferred to a securitisation vehicle.
General description of the measure
This measure will introduce a new anti-avoidance provision in situations where there has been a non-derecognition of assets transferred to a securitisation vehicle and a liability is recognised in connection with the transfer. The new rule will deny tax relief for amounts arising from such arrangements that are attributable to a main purpose of securing a tax advantage.
Policy objective
This measure will support fairness in the tax system. This measure specifically addresses certain arrangements designed to secure a tax advantage, with a view to deterring them and securing receipts for the Exchequer that might otherwise be deferred through tax disputes.
Securitisations form an important part of the UK’s financial services landscape. This measure maintains support for securitisations.
Background to the measure
This measure was announced at Budget 2025.
Securitisations
In a securitisation, an ‘originator’ company transfers financial assets to the securitisation vehicle, which issues debt secured on the financial assets. The loan notes are split into tranches, offering varying risk and reward.
For accounting purposes, in certain cases an originator may be required to continue to recognise the transferred assets. This may be referred to as non-derecognition, failed derecognition or continuing recognition. This can happen in a retained securitisation, being a securitisation where all the loan notes issued are beneficially owned by the originator’s group.
Arrangements seeking to secure a tax advantage
An example of arrangements seeking to secure a tax advantage could involve an originator company selling some of the loan notes issued in a retained securitisation to an overseas subsidiary, with that sale funded by a low-interest loan from the originator to the overseas subsidiary. For accounting purposes, this could result in the recognition of a liability in the originator in connection with the original transfer of assets, and the originator recognising an expense in respect of this non-derecognition liability (which can be known as a failed derecognition liability or a continuing involvement liability).
In such a case, HMRC considers that existing legislation would also negate any UK tax advantage for such arrangements.
Detailed proposal
Operative date
The measure will have effect from 26 November 2025.
Current law
Chapter 1 of Part 20 of the Corporation Tax Act (CTA) 2009 deals with restriction of deductions for the purposes of Corporation Tax.
Proposed revisions
The new rule restricts deductions arising from arrangements where a main purpose of the arrangements is to secure a tax advantage. However, the rule will only be engaged where assets are transferred to a securitisation vehicle, these continue to be recognised for accounting purposes and, in connection with the transfer, a liability is recognised for accounting purposes.
The rule will apply in relation to UK or non-UK securitisations.
Summary of impacts
Exchequer impact (£ million)
| 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 |
|---|---|---|---|---|---|
| +20 | +55 | +75 | +145 | +110 | +60 |
These figures are set out in Table 4.1 of Budget 2025 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Budget 2025.
Macroeconomic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure has no impact on individuals as it only affects businesses.
Equalities impacts
This measure only affects businesses, therefore it is not anticipated that there will be disproportionate impacts on those in groups sharing protected characteristics.
Administrative impact on business including civil society organisations
This measure will have no impact on compliant businesses. However, all businesses may need to familiarise themselves with the rules.
This measure is not expected to disproportionately impact civil society organisations.
This measure is expected overall to have no impact on businesses experience of dealing with HMRC as the change impacts companies engaged in arrangements to secure a tax advantage.
Operational impact (£ million) (HMRC or other)
There are expected to be no or minimal HMRC operational impacts following this change.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
Consideration will be given to monitoring and/or evaluating aspects of the policy after monitoring data have been analysed and collected.
Further advice
If you have any questions about this change, contact financialproductsbai@hmrc.gov.uk.