The Code of Practice on Taxation for Banks Annual Report 2026 was laid before Parliament on 1 October 2026, covering the reporting period April 2025 to March 2026. The Code, introduced in 2009 and updated in 2016, sets out principles for tax planning, governance, and transparency for UK banking groups and building societies. This year’s report highlights a continued decline in aggressive tax planning by signatory banks, with zero instances of ‘non-compliant’ behavior recorded for the third consecutive year. HMRC’s Bank Tax Unit conducted 12 deep-dive reviews during the period, focusing on transfer pricing for intra-group financing, hybrid mismatch rules, and the application of the Diverted Profits Tax to banking structures.
Key Takeaways
- Compliance Trends: All 34 signatory banks submitted timely Code returns. The report notes increased voluntary disclosure of uncertain tax positions, with 22 banks providing enhanced transparency schedules beyond minimum requirements. Tax governance frameworks have matured, with 31 banks now having board-level tax risk committees.
- International Alignment: The Code’s principles are being used as a template for similar frameworks in Australia, Canada, and the EU. HMRC participated in the OECD’s Forum on Tax Administration (FTA) banking subgroup to align approaches on BEPS 2.0 implementation, particularly Pillar Two global minimum tax implications for banking groups.
- Future Focus Areas: The report flags emerging risks: crypto-asset custody services, decentralized finance (DeFi) exposures, and the tax treatment of green finance instruments. HMRC will issue supplementary guidance on these topics by March 2027.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement