Tax provisions for public sector bodies as part of a statutory reorganisation
Published 28 October 2026
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This publication is available at https://www.gov.uk/government/publications/statutory-reorganisations-general-power/tax-provisions-for-public-sector-bodies-as-part-of-a-statutory-reorganisation
Who is likely to be affected
The measure affects public sector bodies which are subject to transfer schemes as a result of a reorganisation which is made by legislation.
General description of the measure
This measure creates a general power to neutralise any tax consequences of a reorganisation of public sector bodies, as happens for most internal reorganisations of commercial businesses. This replaces the need for such powers to be made on a case-by-case basis.
Policy objective
The provisions that neutralise the tax consequences of commercial restructuring commonly cannot apply to similar restructuring of public sector bodies due to the nature of the entities involved. Instead the same effect is currently given by specific provisions in the relevant act of Parliament for each reorganisation.
This current process can lead to issues of timing and complexity and is inefficient. A general power will remove these issues.
Background to the measure
The measure is being introduced at Budget 2026. There has been no consultation because the measure is strictly limited to public sector bodies where there is a reorganisation made by an Act of Parliament.
Detailed proposal
Operative date
The measure will allow for the creation of statutory instruments under the power on and after the date of Royal Assent to Finance Bill 2026-27.
Current law
For each statutory reorganisation a Treasury Minister needs to give agreement for a provision in primary legislation to be included in either the lead Government Departments Bill or a Finance Bill. That primary legislation will directly deal with those tax consequences of the restructuring which are fully known, and where necessary will make a Treasury power for secondary legislation to address consequences which are not fully known.
Examples of specific powers can be found in sections 3 and 67 of the Health Bill 2026, and section 93 of the Railways Bill 2026 (section numbers correct at time of publication).
Proposed revisions
The change will create a new power to make provision for tax neutral transfers of assets, rights and liabilities between public sector bodies where these result from a statutory reorganisation. The power will be exercised through the creation of statutory instruments, exercisable by HM Treasury and subject to annulment by a resolution of the House of Commons. Its scope is limited to transfers between public sector bodies.
The power will cover all taxes and duties the collection and management of which HMRC are responsible for. The power would be used where existing provisions do not provide tax neutrality, supplementing such provisions where needed as is currently the process case-by-case.
Summary of impacts
Exchequer impact (£million)
| 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 | 2031 to 2032 |
|---|---|---|---|---|---|
| — | Nil | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
This measure is not expected to have any impact on individuals, households or families.
The provisions confer a power to make regulations to neutralise the tax consequences of statutory reorganisations solely for public sector bodies.
Equalities impacts
This measure only affects tax paid by public bodies. It is aimed at providing a general power to make secondary legislation which neutralises tax costs of statutory reorganisations and so reduce costs to the public purse. Therefore, it is not anticipated that there will be impacts on those in groups sharing protected characteristics.
Administrative impact on business including civil society organisations
This measure is not expected to have any impact on businesses or civil society organisations.
The provisions confer a power to make regulations to neutralise the tax consequences of statutory reorganisations solely for public sector bodies.
Operational impact (£million) (HMRC or other)
We expect there to be no substantive operational impacts on HMRC. Funding for dealing with statutory reorganisations in HMRC is already in place and there are no additional financial consequences for HMRC as a result of this measure.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The number of reorganisations which require tax powers each year is historically very low. Statutory instruments created in exercise of the power will provide a public record of the number of times the power has been used and how it has been used. Under those circumstances, it is not intended to put in place any formal ongoing monitoring and evaluation.
Further advice
If you have any questions about this change, contact us at statutoryreorganisations@hmrc.gov.uk.