BKM408150 - Banking surcharge: application to unassessed transfer pricing profits

The Unassessed Transfer Pricing Profits (UTPP) rules apply to accounting periods beginning on or after 1 January 2026.

TIOPA10/S217A

Where a company (including a banking company) has unassessed transfer pricing profits for an accounting period, then HMRC may assess those profits under the unassessed transfer pricing rules (the UTPP rules).

Unassessed transfer pricing profits are assessed at the UTPP rate of corporation tax. The UTPP rate is calculated as the sum of:

  • the underlying corporation tax rate, and
  • 6%

The underlying corporation tax rate is the sum of:

  • the rate at which corporation tax would be chargeable on the unassessed transfer pricing profits if they were added to the company’s profits for the accounting period on which corporation tax would otherwise be chargeable, and
  • the percentage given by dividing the total of any amounts that would be assessable or chargeable on the unassessed transfer pricing profits as if they were corporation tax (reduced by any reliefs that would be specific to those amounts) by the amount of the unassessed transfer pricing profits

In circumstances where a banking company’s profits are subject to the banking surcharge, then the calculation of the underlying corporation tax will therefore reflect the additional tax charge arising due to the application of the surcharge.

For example, if a banking company has unassessed transfer pricing profits for the accounting period ended 31 December 2026, all of which would otherwise have been liable to the banking surcharge, the applicable rate of tax payable will be 34%.

This is the sum of:

  • the rate at which corporation tax would have been chargeable - 25%
  • the percentage given by dividing the amount of banking surcharge chargeable by the amount of unassessed transfer pricing profits - 3%
  • 6%

Where only part of a banking company's unassessed transfer pricing profits would otherwise have been liable to the banking surcharge due to the £100m surcharge allowance, the applicable rate of tax will be between 31% and 34%. See INTM489155 for an example of how the rate is calculated for banking companies.