From 31 December 2023, the UK has introduced two brand‑new taxes, the Multinational Top‑up Tax (MTT) and the Domestic Top‑up Tax (DTT), as part of the global Pillar 2 reform to ensure large groups pay at least a 15% effective tax rate in every jurisdiction in which they operate.
Even if your business doesn’t owe any top‑up tax, these changes still carry new reporting and administrative duties. HMRC has rolled out guidance and digital services, webinars, and staged registration to help businesses transition smoothly. This is a big shift in international tax, but with clarity, preparation and the right guidance, it doesn’t need to feel overwhelming, or stressful.
Why These Taxes Exist. The Pillar 2 Backdrop
In October 2021, over 135 countries, including the UK, signed up to enforce a global minimum corporate tax rate of 15% under the OECD's Pillar 2 model.
The UK’s response: introduce two mechanisms, MTT (Income Inclusion Rule) and DTT (Qualifying Domestic Minimum Top‑up Tax), ensuring UK businesses and multinationals meet that rate. These apply for accounting periods starting 31 December 2023 onward
Who Must Register, and by When
Any group, including single entities, with at least one UK presence and consolidated revenues of €750 million+ in at least 2 of the previous 4 years must register for Pillar 2, even if no tax is due.
HMRC began issuing phased communications (emails and letters) to in‑scope groups, notably in March 2025
Registration must happen within six months of the end of the first in‑scope accounting period. For a 31 December 2024 year‑end, that deadline was 30 June 2025
Reporting Obligations & Returns
Once registered, the filing member must:
- File a Global Base Erosion (GloBE) Information Return, showing tax computations across jurisdictions.
- Submit a UK Self Assessment return or a Below‑Threshold Notification, including both MTT and DTT liabilities and member‑specific breakdowns
- Be aware: even if no liability arises, reporting and record‑keeping obligations still apply
Introducing the Undertaxed Profits Rule (UTPR)
Beyond the Income Inclusion Rule (MTT), the UK also adopted the Undertaxed Profits Rule (UTPR) as a fallback measure from accounting periods beginning 31 December 2024. UTPR allocates top‑up charges between entities when the main rule doesn’t catch the tax gap
Evolving Guidance & Stakeholder Feedback
HMRC has issued draft guidance in several tranches, June 2023, December 2023, September 2024, and a final supplementary version in early 2025. Full internal HMRC manual was published on 5 August 2025. Guidance now covers flow through entities, insurance sector, joint ventures, additional top‑up amounts, and UTPR mechanics
Administrative Details & HMRC Powers
The HMRC internal manual (MTT55180) clarifies how HMRC may review claims of overpaid tax. It defines the "compliance check window" (by the quarter day following the first anniversary of claim) and procedures for closure notices, amendments, repayments, or penalties.Taxpayers retain the right to appeal or seek tribunal direction if needed
Conclusion
The UK’s rollout of Multinational Top‑up Tax (MTT) and Domestic Top‑up Tax (DTT) is a significant milestone in global tax reform. While the aim is simple, ensure that large groups, UK‑based or multinational, pay at least 15% tax, the mechanics and compliance steps are complex.
Registration, GloBE returns, UTPR, appeals, and administrative checks all form part of the new landscape. That’s why businesses need to stay informed, start early, and maybe get advice to navigate smoothly.
