# Finance Act 2025, Paragraph 43: Domestic top-up tax

Extent: E+W+S+N.I.

(1) Section 272 (determining top-up amounts of entity that is a member of a group) is amended as follows.
(2) After subsection (3) insert—
“(3A) Part 3 has effect for those purposes as if the following sections were substituted for section 193—
“Determination of top-up amounts of entity that is a member of a group
193 (1) Subsection (2) sets out (for the purposes of Step 1 of section 270(A1)) how to determine in relation to an accounting period—
(a) whether an entity which is a standard member of a group has a top-up amount, and
(b) if so, what the amount is.
(2) Take the following Steps—
Step 1
Determine for the period (in accordance with section 272) the sum of any top-up amounts and additional top-up amounts of standard members of the group (the “total top-up amount”).
Step 2
Determine for each such member—
(a) the adjusted profits (if any);
(b) the covered tax balance.
Step 3
For each standard member of the group in relation to which a positive amount of adjusted profits is determined under Step 2, determine the “effective tax rate” by dividing the amount found under Step 2(b) (covered tax balance) by the amount found under Step 2(a) (adjusted profits).
Step 4
For any standard member of the group whose effective tax rate (see Step 3) is less than 15%—
(a) determine that member’s “top-up tax percentage” by subtracting the member’s effective tax rate from 15%, and
(b) proceed to Step 5.
Step 5
Calculate for the member an amount (an “allocation key amount”) by multiplying—
(a) the member’s top-up tax percentage (see Step 4(a)), by
(b) the member’s adjusted profits.
Step 6
Determine the sum (the “group allocation key amount”) of all the allocation key amounts calculated under Step 5 for members of the group.
Step 7
Determine the “allocation key ratio” for each standard member of the group whose effective tax rate (see Step 3) is less than 15%, by dividing—
(a) the member’s allocation key amount (see Step 5), by
(b) the group allocation key amount (see Step 6).
Step 8
Determine each such member’s top-up amount by multiplying—
(a) the sum of any top-up amounts and additional top-up amounts of standard members of the group for the period (see Step 1), by
(b) the member’s allocation key ratio (see Step 7).
Step 9
If none of the standard members falls within Step 3, or none of them has an effective tax rate of less than 15%, each standard member has a top-up amount equal to—
(a) the total top-up amount, divided by
(b) the number of the standard members.
Section 193: supplementary
193A (1) Section 193 and subsection (2) of this section apply to joint venture groups and their members as they apply to groups and their members.
(2) Section 193 has effect in relation to a qualifying entity that is a standard member of a group as if the total top-up amount referred to in that section included any top-up amounts or additional top-up amounts of qualifying investment entities determined under sections 220 to 224.
(3) See also subsections (9) to (11) of section 272, which—
(a) define “qualifying investment entity” in relation to a qualifying entity, and
(b) make further provision about top-up amounts (for the purposes of domestic top-up tax).””
(3) In subsection (8) omit paragraph (e).

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Source: https://www.legislation.gov.uk/ukpga/2025/8/schedule/4/paragraph/43 (the official version)
Page: https://openlegislation.uk/finance-act-2025/schedule-4/paragraph-43
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.