MTT09490 | Miscellaneous pages: Effective date of FA25 amendments and the retrospection election

In the Finance Act 2025, a number of amendments were made to the MTT legislation in Finance (No.2) Act 2023.

The commencement date for these amendments varies:

• amendments that will always be beneficial to the taxpayer will typically apply retrospectively for periods beginning on or after 31 December 2023 (the implementation date of MTT).

• some amendments will apply prospectively for periods beginning on or after 31 December 2024.

• the majority of amendments will, by default, apply prospectively for periods beginning on or after 31 December 2024, unless a retrospection election is made.

Where the retrospection election is made, the relevant amendments will all apply retrospectively for all members of the group from the implementation date.

The only provision to fall outside these categories is the transitional safe harbour anti-arbitrage rule (see MTT15990), which is effective from the 14 March 2024.

The retrospection nature is of a different nature to other MTT elections. It is set out in paragraph 63 in Part 3 of Schedule 4 of FA25.

Nature of the retrospection election

The retrospection election will apply on a group basis. It will also apply to any joint venture groups owned by the consolidated group that makes the election.

HMRC does not need to be notified that an election has been made. The retrospection election is in effect made when the group submits a self-assessment return that has been prepared on the basis that the election has been made.

Once an election has been made, it cannot be revoked.

An election will apply to every accounting period beginning before 31 December 2024, and cannot be made for only certain accounting periods (where there is more than one due to an accounting period of less than a year).

Conditions

The following conditions must be met for a retrospection election to be valid:

• the election must be made on or before the day on which the first self-assessment return or below-threshold notification for the first accounting period beginning on or after 31 December 2023 is submitted, and

• written consent must be given by all relevant members (see below).

Therefore, the group should obtain written consent by the date the self-assessment return is submitted.

See MTT53000 for guidance on the self-assessment return filing date.

Written consent

An election cannot be made without the written consent of:

In effect, written consent is required from every responsible member and every member of the group that (disregarding any election to make a single member liable) will have a DTT top-up amount or additional top-up amount when the retrospection election has been made.

The filing member should retain evidence that the election was made and retain any records of written consent given in accordance with the record-keeping requirements (see MTT51500).

Where:

• the filing member was unaware that a member needed to give consent at the time the election was made,

• it was reasonable for the filing member to consider that the consent of that member was not required, and

• the filing member obtains written consent from that person within a period of 60 days beginning on the day the filing member realised that the person needed to provide consent,

That written consent is treated as having been given prior to the election being made.

Requirement for written consent where companies have been struck off

The rules around the retrospection election were set in large part to ensure that no company within a group could have its liability retrospectively increased without its consent.

There are limited circumstances in which a member of a group which has been liquidated or struck off is, on the face of the law, required to consent to a retrospection election. Since the retrospection election clause was not published until late in 2024, groups may have liquidated members before this time, when they could not have been aware that it would impact their ability to make a retrospection election.

A company should not have been struck off or liquidated in circumstances where it was anticipating a DTT liability for the 2024 period. Therefore, the consent of struck off companies to a retrospection election should only potentially be required in the following two cases:

• the struck off company had no liability at the time it was struck off, but would acquire one as a result of the retrospection election.

• the struck off company would have had a liability at the time it was struck off, or as a consequence of the retrospection election, but a section 271 election to make a single member liable for DTT was in effect at the time it was struck off.

In these cases, HMRC will accept that consent of the struck off company is not required for the retrospection election to be made, as long as a valid section 271 election is in effect for the relevant periods.

Amendments subject to the retrospection election

The table below sets out the package of amendments to which the retrospection election applies.

Where an election is made these amendments will all take effect for accounting periods beginning on or after 31 December 2023 for all members of the group.

Amendments are included in the retrospection election even where HMRC considers the amendment to be entirely clarificatory. Therefore, it should not be inferred that an alternate interpretation of the original legislation is acceptable because an amendment has been made subject to the retrospection election.

Amendments that apply retrospectively regardless of the retrospection election

The table below sets out the amendments which apply retrospectively whether or not the retrospection election has been made.

These amendments take effect from the implementation date of MTT.

These amendments are those which HMRC considers to be beneficial to taxpayers in all circumstances. However, amendments that reflect unilateral UK policy choices are included in the retrospection election, even if they would otherwise fall into this category.

Amendments that apply prospectively regardless of the retrospection election

The table below sets out the amendments which apply prospectively whether or not the retrospection election has been made.

These amendments take effect for periods beginning on or after 31 December 2024, except for the anti-arbitrage rule.

The anti-arbitrage rule was announced by ministerial statement on 14 March 2024, and the provision applies prospectively from that date in accordance with paragraph 42(2). Paragraph 42(3)-(5) consists of minor consequential changes which apply prospectively for periods beginning on or after 31 December 2024.