Diverted Profits Tax (DPT)
The Diverted Profits Tax is a standalone UK anti-avoidance tax, introduced in 2015, charged at a rate above the main corporation tax rate to counter arrangements that artificially divert profit out of the UK. It currently applies at 31%, which is 6 percentage points above the 25% main rate, and targets two situations: UK companies using connected-party transactions that lack economic substance, and foreign companies that do business in the UK but structure their affairs to avoid having a UK taxable presence. It does not apply to SMEs. It is being merged into the normal corporation tax rules from 2026, replaced by a charge on unassessed transfer-pricing profits. It raised £108m directly in 2023-24, but its main use is as leverage to settle larger transfer-pricing disputes.
ByLoopholeKiln EditorialPublished
Figures current as of·Corrections
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Example: a structure that historically routed UK sales through a low-tax country to avoid a UK taxable presence is exactly the kind of arrangement the DPT was built to break.
Why it matters to a small business: the DPT does not apply to you. It is purely a large-business instrument, which confirms there is a separate enforcement universe for multinationals and another for everyone else.