G7 Global Minimum Tax Policy – Are UK Businesses the Biggest Winners?

A new wave of global tax negotiations is quietly unfolding.

Following significant progress made by the G7 nations on the global minimum tax and the crackdown on multinational tax avoidance, the United States has agreed to remove Section 899 – a retaliatory tax clause against foreign companies – from the 'Big Beautiful Bill'. This move spares UK-based businesses from what could have been an enormous additional tax burden.

The breakthrough brings a degree of stability to the international tax environment and sends a positive signal to businesses currently operating in the UK or planning to expand internationally via the UK.

1. UK businesses protected – US-UK tax conflict averted

Section 899 of the Big Beautiful Bill had been proposed as a retaliatory tax provision aimed at foreign firms not in line with global minimum tax standards. UK companies were likely to be the most directly affected: had it been enacted, a substantial number of British multinationals would have faced punitive tax increases in the US, significantly undermining investment confidence and trade between the two nations.

Concerned over the looming threat, British businesses quickly urged the government to intervene. The new Labour Chancellor, Rachel Reeves, faced this tax controversy as her first major challenge. She promptly opened discussions with US Treasury Secretary Scott Besant, taking business concerns directly to the negotiating table.

Fortunately, the outcome was favourable. The US agreed to drop Section 899, the G7 nations reached consensus on compatibility between US and global tax frameworks, and joint efforts to implement the OECD’s global minimum tax agreement will now proceed.

This not only diffused potential economic confrontation between the UK and US, but also signalled that Britain is prepared to defend the interests of its domestic companies in the international tax arena.

2. G7 nations drive global minimum tax reform

As the US eases back from unilateral tax penalties, the G7 countries are jointly advancing the OECD’s ‘Base Erosion and Profit Shifting’ (BEPS) Pillar Two policy – the Global Minimum Tax. This mandates that multinational corporations must pay at least 15% effective tax rate, regardless of where profits are booked or transferred.

The aim is clear: to curb tax haven practices, ensure fair tax distribution across jurisdictions, and establish a level global playing field.

Historically, many large companies shifted profits to low-tax jurisdictions such as the Cayman Islands or Ireland via complex legal structures, dramatically reducing their tax liability. While technically legal, these practices disrupted fair competition and undermined national revenues.

3. A window of opportunity for UK businesses

The UK remains one of the world’s most established offshore company jurisdictions and international investment hubs. It continues to optimise tax policy, corporate governance structures, and business support measures – making it an increasingly attractive destination for Chinese and international enterprises.

Flexible Company Structures

• Limited Company (Ltd): The most common type, suitable for international trade, e-commerce and consulting. Easy to register.

• Limited Liability Partnership (LLP): Transparent structure, often used for tax planning.

• Public Limited Company (PLC): Ideal for larger businesses and those planning a public listing.

Efficient Company Formation

• No physical presence required for directors

• Overseas investors can use registered office address services

• Incorporation usually completed within 24 hours

Banking & Cross-border Transactions

• UK companies can open local or digital bank accounts (e.g. Revolut, Wise)

• Support for multi-currency settlements in GBP, USD, EUR

• Facilitates global trade and supply chain operations

Corporate Tax Incentives

1. Corporation Tax Relief

The standard UK corporation tax rate is 25%, but small businesses with profits under £50,000 benefit from a reduced 19% rate. For high-income individuals, this can be significantly more tax-efficient than personal income tax at the same thresholds.

2. Business Expense

Deductions Allowable expenses reduce taxable profits, including:

• Office supplies

• Employee salaries, pensions and benefits

• Business travel (e.g. car, public transport)

• Training and education

• Advertising and marketing costs

• Utilities (electricity, water, internet)

• Rent and property expenses

• Insurance premiums (e.g. business, property)

3. Capital Allowances

Companies may deduct part or all of capital expenditure from their tax bill. For example, vehicles purchased in the company’s name – especially energy-efficient models – may qualify for additional relief.

4. R&D Tax Relief

Qualifying research and development spending can be deducted at up to 230%, with the potential for cash refunds.

5. Patent Box Scheme

Eligible patent-derived income is taxed at just 10%.

6. SEIS/EIS Investment Reliefs

Start-ups can attract angel investors and venture capital via generous tax incentives – including up to 50% income tax relief for individual investors.

Ongoing compliance requirements

After forming a UK company, businesses must meet annual tax and reporting obligations – even if no trading takes place. This includes:

• Confirmation Statement

• Annual Accounts

• Corporation Tax filing

• PAYE and National Insurance (if applicable)

• VAT returns (if VAT-registered)

While most of these are annual requirements (VAT may be monthly or quarterly), deadlines vary. As highlighted above, there are many tax benefits available, but navigating the timing and structure of these obligations requires careful planning.

If you’re unsure about how to file, when to file, or how to use tax reliefs properly, it is strongly advised to consult a qualified tax advisor or accountant.

Some advice from TB Accountants

The G7 agreement on the global minimum tax regime provides reassurance to UK businesses operating within an increasingly complex international tax landscape. It also reaffirms Britain’s status as a strategic location for corporate headquarters, financial compliance, and global asset planning.  

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This article is intended as general guidance only, and does not replace any legal or professional advice.  For enquiries, please contact TBA Group via email or WhatsApp.