The figures emerged during scrutiny by Parliament’s Public Accounts Committee, which has been examining how HMRC collects tax from major multinational businesses. The committee said the tax authority’s overall approach is working, while warning that cross-border profit shifting continues to pose significant risks.
The global minimum corporate tax agreement was finalised by the Organisation for Economic Cooperation and Development in January and was backed by nearly 150 countries. It introduced a minimum corporate tax rate of 15% with the aim of limiting the movement of profits into lower-tax jurisdictions. The United States, however, will not be subject to these rules under the exemption agreement.
The committee’s findings place renewed attention on how multinational companies are taxed in the UK and whether the new international framework will deliver the expected level of revenue.
HMRC Says U.S. Exemption Reduces Expected Revenue from Pillar 2
According to HMRC, the exemption granted to the United States will reduce the additional tax expected to be collected in the UK by around £600 million each year. Nicole Newbury, HMRC’s director of large business compliance, outlined the impact during evidence given to the Public Accounts Committee.
She told MPs that the forecast revenue from Pillar 2, the global minimum tax rules, has now fallen to £1.6 billion annually. “It has reduced the benefit – the additional tax that will be paid in the UK – by about £600 million a year,” she said. “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.”
According to the Public Accounts Committee, HMRC‘s system for collecting tax from large businesses is “generally working well”. At the same time, the committee concluded that substantial risks remain because multinational companies may continue to shift profits between countries, affecting where tax is ultimately paid.
Committee Highlights International Tax Risks Facing the UK
The Public Accounts Committee also examined the scale of international tax issues currently under investigation by HMRC. According to the committee, HMRC is considering £70.1 billion of tax matters involving large businesses during 2025, with around £21 billion carrying international risks linked to cross-border activity.
Clive Betts MP, deputy chairman of the committee, said the UK continues to face the possibility of losing tax revenue through multinational profit diversion. According to the committee, he said HMRC should strengthen its understanding of how companies are complying with the new international minimum corporation tax rules, particularly following the agreement exempting US companies.
HMRC defended its wider record on multinational taxation. According to the tax authority, its compliance work with large businesses generated an additional £14.9 billion in tax revenue during the previous year through the application of existing tax rules.
The OECD agreement was designed to reduce opportunities for multinational companies to move profits into jurisdictions with lower tax rates. While the framework remains in place across participating countries, HMRC has confirmed that the US exemption will reduce the level of additional revenue expected to be collected in the UK under Pillar 2.
