Corporate Interest Restriction: relief for certain capital expenditure in calculation of taxable earnings (tax-EBITDA)
Published 26 November 2025
© Crown copyright 2025
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/corporate-interest-restriction-relief-for-certain-capital-expenditure-in-calculation-of-taxable-earnings/corporate-interest-restriction-relief-for-certain-capital-expenditure-in-calculation-of-taxable-earnings-tax-ebitda
Who is likely to be affected
Large businesses within the charge to Corporation Tax (CT) with net interest and other financing costs (within the scope of CT) exceeding £2 million per annum.
General description of the measure
This measure makes technical amendments to Corporate Interest Restriction (CIR) legislation. In particular, the measure makes a change to the calculation of taxable earnings (tax-EBITDA) in relation to capital expenditure on waste disposal site preparation and restoration, cemeteries and crematoria and flood and costal erosion risk management projects.
Policy objective
CIR restricts the ability of large businesses to reduce their taxable profits through excessive UK interest expense and other financing costs. It encourages alignment of the location of taxable profits with the location of economic activity and is consistent with the UK’s more territorial approach to corporate taxation.
This measure makes technical amendments to CIR legislation to ensure that the regime works as intended.
Background to the measure
This measure was announced at Budget 2025.
As part of HMRC’s engagement with customers and their advisers, it has been identified that under the CIR rules certain items of capital expenditure in respect of waste site preparation and restoration, and cemeteries and crematoria and flood and coastal erosion projects are not treated as intended.
Detailed proposal
Operative date
The amendments have effect for periods ending on or after 31 December 2021.
Current law
The CIR rules are in Part 10 of Taxation (International and Other Provisions) Act 2010 (TIOPA 2010). For CIR purposes, tax-EBITDA is defined in section 407 of TIOPA 2010.
Proposed revisions
Legislation will be introduced in Finance Bill 2025-26 to amend the calculation of tax-EBITDA in section 407 TIOPA 2010.
In particular, the calculation of tax-EBITDA will be amended to exclude capital expenditure deducted by way of specific reliefs in respect of waste disposal site preparation and restoration, and cemeteries and crematoria and flood and coastal erosion risk management projects.
Summary of impacts
Exchequer impact (£ million)
| 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 |
|---|---|---|---|---|---|
| Negligible | Negligible | Negligible | Negligible | Negligible | Negligible |
This measure is expected to have a negligible impact on the Exchequer.
Macroeconomic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
There is no impact on individuals as this measure 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 a negligible impact on around 50 large businesses which are subject to CIR and which incur capital expenditure on waste site preparation or restoration, cemeteries and crematoria and flood and costal erosion projects.
One-off costs could include familiarisation with the change, upskilling staff on the change, and updating software. Ongoing costs may include adjusting for these items in affected interest restriction returns. This measure is not expected to disproportionately impact civil society organisations as it only affects large businesses.
This measure is expected overall to have no impact on businesses experience of dealing with HMRC.
Operational impact (£ million) (HMRC or other)
This measure will not have significant operational impact.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
Consideration will be given to monitoring this measure through regular communication with affected taxpayer groups .
Further advice
If you have any questions about this change, contact Richard Daniel in the Financial Products and Services Team (BAI) on 03000 569408 or cirworkinggroup@hmrc.gov.uk.