The UK is set to miss out on around £600 million in tax revenue each year due to a deal that exempts the US from a global tax commitment, according to figures from the tax office. HMRC confirmed the expected tax loss during a review by Parliament’s Public Accounts Committee (PAC) into taxes paid by large multinational companies in the UK.
A new landmark international tax deal was agreed in January, with 150 countries committing to a 15% global minimum tax to stop large multinational companies shifting profits to lower-tax jurisdictions. However, the US will be exempt from the deal, which was finalised by the Organisation for Economic Cooperation and Development.
Nicole Newbury, director of large business compliance at HMRC, told the committee that the US exemption from the Pillar 2 tax rule will affect the UK’s tax income.
She said: “It has reduced the benefit – the additional tax that will be paid in the UK – by about £600 million a year. The forecast for what Pillar 2 will bring into the UK has now reduced to £1.6 billion a year, so there will be a monetary impact.”
The PAC has warned the UK tax authority must better tackle the large risk of global firms diverting their profits overseas and therefore shifting tax jurisdictions.
While the PAC found HMRC’s approach to collecting tax from large businesses is “generally working well,” it said there are still “significantly high” risks related to multinationals potentially diverting profits across borders.
Of the £70.1 billion in tax under consideration in 2025 as part of investigations into large businesses, HMRC estimates that around £21 billion faces international risks.
The committee is therefore calling on the tax body to provide further insights on the risks involved and how it can better tackle potential issues.
Clive Betts MP, deputy chairman of the committee, said: “The UK still risks bleeding a significant amount of its tax take overseas through the cross-border diversion of multinationals’ profits over borders.
“HMRC should be bearing down on work to understand how companies are complying with new rules on international minimum rates for corporation tax, particularly in light of the parallel agreement with the US exempting their own companies from these rules.”
