Policy paper

VAT (Refund of Tax to Great British Nuclear) Order 2026

Published 18 March 2026

Who is likely to be affected

Great British Energy - Nuclear (GBE-N) and any future company that may be designated by the Secretary of State as Great British Nuclear (GBN).

General description of the measure

This measure will entitle a company that is designated by the Secretary of State under section 317 of the Energy Act 2023, currently GBE-N, to receive refunds of Value Added Tax (VAT) incurred on certain services purchased to support their non-business activities.

Policy objective

Where non-departmental public bodies (NDPBs) and similar bodies carry out similar activities to government departments, these bodies are able to recover the VAT incurred on services purchased in support of their non-business activities, insofar as the Treasury directs and where either:

• the activities are publicly funded and could have been carried out by, or under the control of, a government department that is eligible for VAT recovery under section 41 or
• the bodies have entered into a cost-sharing arrangement

This measure promotes fairness by allowing GBE-N, and any future company so designated, access to this VAT recovery scheme.

Background to the measure

Normally, VAT can only be reclaimed on the purchase of goods and services made by a VAT-registered person, and which are used in the course of taxable business activities. NDPBs, like government departments, mostly engage in non-business activities and therefore cannot ordinarily reclaim the VAT on purchases made to support those activities.

Government departments may reclaim VAT on the cost of contracting out a number of services, or the VAT incurred in cost-sharing arrangements, listed in a Treasury direction. This refund scheme ensures that what would otherwise be irrecoverable VAT does not become a disincentive to contracting out public services to other providers, or to departments sharing their back-office costs.

Section 33E of the Value Added Tax Act 1994 was enacted in 2016, initially to ensure that what would otherwise be irrecoverable VAT did not dissuade NDPBs and similar bodies from entering into cost-sharing arrangements. The policy objective was consequently expanded to include publicly funded activities that could have been carried out by, or under the control of, a government department.

The Treasury has the power to make an Order specifying the persons that are eligible for refunds of VAT under section 33E. Subject to any necessary adjustments to their public funding, a body which is a specified person may reclaim VAT insofar as the Treasury direction already mentioned permits.

GBE-N is a publicly funded body which acts as the Government’s nuclear body with the specialist capability and skills necessary to deliver the Small Modular Reactor programme. This measure will enable GBE-N to reclaim VAT for its non-business activities.

Detailed proposal

Operative date

This instrument will have effect from 8 April 2026.

Current law

Section 33E of the Act allows for refunds of VAT incurred on non-business activities to specified persons as directed by HM Treasury. Section 33E(8) defines a specified person as any person named as such in an Order made by HM Treasury.

Proposed revisions

HM Treasury will make an Order specifying that a company designated as GBN is a person entitled to recover VAT under section 33E of the Act.

Summary of impacts

Exchequer impact (£ million)

2025 to 2026	2026 to 2027	2027 to 2028	2028 to 2029	2029 to 2030	2030 to 2031
nil	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 and families, as it makes provision for GBE-N and any future company that may be designated by the Secretary of State.

This measure should have no impact on family formation, stability or breakdown.

Equalities impact

This measure only affects GBE-N and any future company that may be designated by the Secretary of State, 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 businesses as it specifically relates to VAT recovery by a single body, GBE-N.

Overall, this measure is expected to have no impact on businesses’ or individuals’ experience of dealing with HMRC as the change does not alter any processes or tax administration obligations.

This measure is not expected to impact civil society organisations.

Operational impact (£ million) (HMRC or other)

It is not anticipated that implementing this change will incur any additional costs or savings for HMRC.

Other impacts

Other impacts have been considered and none have been identified.

Monitoring and evaluation

The measure will be kept under review through communication with affected taxpayer groups.

Further advice

Contact Chris Logan if you have any questions about this change:

email: christopher.logan@hmrc.gov.uk

Telephone: 0300 200 3700

Declaration

Dan Tomlinson MP, Exchequer Secretary to the Treasury, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.