HMRC consults on bringing HNWIs into scope of UTT regime

HMRC has launched a consultation on widening the scope of the Uncertain Tax Treatment (UTT) regime to include high net worth individuals (HNWI) and trusts, as well as additional taxes.

The UTT regime currently requires large businesses to notify HMRC of legal interpretation ‘uncertainties’ where the tax advantage exceeds £5m, if the business is taking a position that is contrary to HMRC’s known position, and/or the business has made a provision in their accounts to reflect that their interpretation may not be successful if challenged.

The consultation is seeking views on extending the regime to HNWIs and trusts, and widening the scope to include additional taxes such as inheritance tax (IHT), capital gains tax (CGT), stamp duty land tax (SDLT), national insurance contributions (NIC), and the Construction Industry Scheme (CIS).

Under the proposals, individuals and trusts that derive a tax advantage of more than £5m would need to report it to HMRC to investigate how they interpreted the rules.

The government said it was also aiming to reduce the legal interpretation portion of the tax gap by requiring more legal interpretation uncertainties to be notified to HMRC.

The consultation is seeking views on introducing an additional trigger to capture uncertainties that are not currently notifiable, aiming to improve consistency and early visibility of issues.

"This consultation is the latest in a series of policy initiatives aimed at targeting wealthy individuals to plug fiscal gaps and raise tax revenue,” commented Utmost global wealth specialist, Marc Acheson.

“While the aim to reduce the tax gap might be well-intentioned, the extension to individuals and trusts could be problematic and have unintended consequences.

“From a purely numbers standpoint, the vast majority of the tax gap is driven by corporates - primarily small companies – rather than individuals, and differing legal interpretations account for an expected gap of just over £1bn for individuals.

“We have already seen adverse behavioural responses to other measures designed to extract more tax revenue from this cohort, with significant numbers of wealthy non-domiciled individuals having already left the UK."

Acheson added that recent reports had suggested that the ‘Mansion Tax’ may not generate the revenues projected and, alongside the application of IHT to businesses and pensions, there was growing unease that the UK is driving wealth away.

“The cumulative impact of all these measures is that we are now increasingly seeing UK-based entrepreneurs and business owners considering options abroad, particularly as other jurisdictions such as Italy, Switzerland and the UAE continue to compete fiercely to attract wealthy individuals to broaden their tax bases,” he concluded.

The consultation closes on 4 June 2026.

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