HM Treasury has made the Corporation Tax Act 2010 (Part 8C) (Amendment) Regulations 2025, signed at 1.50 p.m. on 1 December 2025 and laid before the House of Commons at 4.30 p.m. the same day. They come into force on 15 January 2026. For finance teams, the change refines when the 45% corporation tax charge applies to interest HMRC pays after tax litigation. Part 8C, introduced in 2015, imposes a 45% charge on ‘restitution interest’ paid by HMRC; the rate itself is unchanged, but the boundary of what counts as restitution interest is tightened.

From commencement, simple interest paid at a rate equivalent to or lower than a statutory tax rate is carved out of Part 8C. The 45% charge remains aimed at awards above that threshold and at compound interest cases. This aligns with HMRC’s policy paper and the accessible draft instrument released earlier this year.

In legislative terms, ‘statutory rate’ means a rate equal to one specified for tax purposes in primary or secondary legislation. In practical terms, where a court pegs simple interest to such a statutory tax rate, that element will be outside Part 8C from 15 January 2026.

Mixed outcomes still need careful review. HMRC’s policy paper confirms that a final payment can remain within scope where part of the award is simple interest at or below the statutory rate but the overall amount exceeds what would have been payable at that rate. The structure of the award, not just its label, will drive tax treatment.

The withholding mechanics are updated to match the scope change. HMRC’s statutory duty to deduct 45% applies to payments of restitution interest; the amendment ensures that simple interest at or below a statutory rate is not swept into the deduction. Expect clearer allocation in payment notices between excluded simple interest and any in‑scope amount.

There is also a later assessment point. HMRC can assess by the later of the normal time limits or two years after the end of the accounting period in which the claim is finally determined. This addresses cases where companies brought interest into account before a court’s final decision or a binding settlement.

Who is affected appears narrow. HMRC estimates negligible Exchequer impact and expects only around 50–60 corporate groups to interact with these rules-primarily those running High Court claims concerning tax paid under a mistake of law. For most companies, this is policy clarification rather than a new burden.

For CFOs and tax leads anticipating receipts, check how interest is specified in pleadings or settlement drafts. If it mirrors a statutory tax rate on a simple basis, plan for that element to sit outside Part 8C from 15 January 2026 and revisit provisions and recognition judgements. Where awards combine methods or rates, isolate any above‑statutory component and model a 45% exposure only on that portion.

Process points matter too. The regulations proceed under the made‑affirmative route and require House of Commons approval. HMRC has flagged that a Tax Information and Impact Note will be published on GOV.UK, and operational guidance may follow; treat any updates as triggers to refresh provisioning and disclosures.

A diary note to end. The operative date is 15 January 2026. If your litigation timetable suggests a payment early in Q1, prepare split calculations on interest, ensure statements from HMRC reflect the new scope, and keep audit papers aligned with the revised rules.