Policy paper

Corporate Interest Restriction — reporting companies

Published 26 November 2025

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 year. 

General description of the measure 

This measure makes changes to Corporate Interest Restriction (CIR) legislation to simplify administration in relation to reporting companies under the regime.  

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 simplifies administration of the regime for both businesses and HMRC.  

Background to the measure 

The administrative rules for CIR have given rise to issues. The lack of a valid reporting company appointment can invalidate any interest restriction returns that have been submitted and deny access to certain elements of the rules.  

On 28 April 2025, as part of tax update 2025 simplification, administration and reform, the government announced the establishment of a working group to consider opportunities to simplify and improve the administration rules for CIR and, in particular, reporting company appointments under the regime.  

Detailed proposal 

Operative date 

The amendments have effect for periods ending on or after 31 March 2026 except for the following: 

• the ability of groups to make retrospective appointments will apply for periods ended on or after 31 March 2024

• the additional disclosure requirements to be included in interest restrictions returns are to be given effect by regulations

Current law  

The CIR rules are in Part 10 of Taxation (International and Other Provisions) Act 2010 (TIOPA 2010). The rules governing the administration of CIR are at Schedule 7A to TIOPA 2010. 

The Corporate Interest Restriction (Electronic Communications) Regulations 2022 (S.I. 2022/770) mandate electronic filing of certain documents. 

Proposed revisions 

Legislation will be introduced in Finance Bill 2025-26 to make amendments to Schedule 7A to TIOPA 2010.  

The legislation will amend the rules for appointment of reporting companies by businesses under paragraph 1 of Schedule 7A to TIOPA 2010 to remove the time limit to appoint a reporting company, and remove the requirement for the appointment to be made ‘by notice’ to HMRC. Instead, businesses will be responsible for ensuring the reporting company has been appointed for a period, with details of the appointment disclosed in the interest restriction return.  

The following additional changes will be made: 

• businesses and HMRC will be able to appoint a reporting company retrospectively for a period where an interest restriction return is purported to have been submitted to HMRC, which will allow the return to be treated as having been validly made

• reporting company appointments will need to be authorised by over 50% of the group (currently the legislation allows exactly 50% of the group, which could result in a ‘deadlock’) 

• reporting company appointments will no longer automatically rollover to later periods, so groups will need to ensure the reporting company is authorised by over 50% of the group for each period

• the statutory obligation on reporting companies to file an interest restriction return will be removed, except in the limited circumstances where HMRC appoints a reporting company or a replacement reporting company

• a new £1,000 penalty will apply where a business have not validly appointed a reporting company before submitting an interest restriction return — this will be subject to certain safeguards

Certain consequential amendments will also be made to the Corporate Interest Restriction (Electronic Communications) Regulations 2022. 

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 6,000 large businesses that are subject to CIR, by making it easier for them to appoint a reporting company. One-off costs could include familiarisation with the new rules. There are not expected to be any ongoing costs. 

This measure is expected overall to impact businesses’ experience of dealing with HMRC as the administration of the CIR rules will be simpler. 

This measure is not expected to disproportionately impact civil society organisations  

Operational impact (£ million) (HMRC or other) 

IT changes will be required to allow interest restriction returns to include additional disclosure. These changes are estimated at £500,000. 

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.