# Finance Act 2026, Paragraph 22: Deferred tax assets and liabilities: exclusions

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

(1) Schedule 16A (safe harbours) is amended as follows.
(2) In paragraph 3 (disqualifying conditions)—
(a) in sub-paragraph (1), for “Conditions A to D” substitute “The following conditions”;
(b) at the end insert—
“(7) Condition E is that—
(a) a member of the group located in the territory has a relevant pre-entry deferred tax asset or relevant pre-entry deferred tax liability, and
(b) the qualifying domestic top-up tax applying in the territory either—
(i) does not make provision corresponding to section 185(7A) to (7D) (exclusion for deferred tax assets arising as a result of government arrangements etc) in relation to relevant pre-entry deferred tax assets and relevant pre-entry deferred tax liabilities, or
(ii) makes such corresponding provision in a way that is inconsistent with the Pillar Two commentary in relation to relevant pre-entry deferred tax assets or relevant pre-entry deferred tax liabilities.
(8) In subsection (7) “relevant pre-entry deferred tax asset” and “relevant pre-entry deferred tax liability” have the same meaning as in Schedule 16, but for that purpose the words “or (7C)” in the definition of “relevant pre-entry deferred tax asset” are to be disregarded.”
(3) In paragraph 4(1)—
(a) omit paragraph (a);
(b) in paragraph (b)—
(i) for “after sub-paragraph (6), there were inserted” substitute “at the end there were inserted the following disqualifying condition”;
(ii) the inserted sub-paragraph (7) becomes an inserted unnumbered sub-paragraph.
(4) In paragraph 5(1)(b)—
(a) omit sub-paragraph (i);
(b) in sub-paragraph (ii)—
(i) for “after sub-paragraph (6), there were inserted” substitute “at the end there were inserted the following disqualifying condition”;
(ii) the inserted sub-paragraph (7) becomes an inserted unnumbered sub-paragraph.

---
Source: https://www.legislation.gov.uk/ukpga/2026/11/schedule/8/paragraph/22 (the official version)
Page: https://openlegislation.uk/finance-act-2026/schedule-8/paragraph-22
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.