Legislation – Finance Act 2025
Schedule 4Pillar two
Part 3Others
Tax equity partnerships
20
(1)
Section 176D (tax credits etc allocated under tax equity partnerships) is amended as follows.
(2)
In subsection (1), for “covered tax balance” substitute “qualifying current tax expense”
.
(3)
“(2)
“Flow-through tax benefits” means—
(a)
tax credits, other than qualifying refundable tax credits and marketable transferable tax credits, and
(b)
the value of amounts of tax deductible losses,
that are made available to be used by an investor in a tax equity partnership arrangement under that arrangement (whether or not those credits or losses are used by the investor).”
(4)
In subsection (3)(b)—
(a)
for “176D” substitute “176E”
;
(b)
at the end insert “and the arrangement”
.
(5)
In subsection (7), for “covered tax balance” substitute “qualifying current tax expense”
.
(6)
“(11)
An election under subsection (3)(b)—
(a)
must specify the first accounting period for which it is to have effect, which must be the first relevant period,
(b)
must be made no later than the date by which the information return or overseas return notification in respect of the first relevant period is due,
(c)
must be included in an information return submitted to HMRC or a qualifying authority in respect of the first relevant period,
(d)
has effect for the first relevant period and each subsequent accounting period, and
(e)
cannot be revoked.
(12)
In subsection (11), “the first relevant period” means the later of—
(a)
the first accounting period in which the member is an investor in the tax equity partnership arrangement, and
(b)
the first accounting period for which the Pillar Two rules apply to the member.”
(7)
Where a person became an investor in a tax equity partnership arrangement in an accounting period that began before 31 December 2024, section 176D(11) of F(No.2)A 2023 (as inserted by sub-paragraph (6)) has effect in relation to the arrangement as if “the first relevant period” were the first accounting period beginning on or after that date.
(8)
In sub-paragraph (7), “investor in a tax equity partnership arrangement” has the same meaning as in section 176D of F(No.2)A 2023.