OECD Agreement on Pillar Two: UK Government Sets Out Next Steps

In the wake of the OECD’s announcement on 5 January 2026 that it has agreed a “side by side” package to address U.S. concerns about “Pillar Two” (the rules imposing a 15% minimum corporate income tax), the U.K. government has issued a statement setting out its intended next steps. In this statement, the government welcomes the stability that the agreement brings and the protection from retaliatory measures that it affords.

The statement explains that measures to implement the OECD agreement will be subject to a technical consultation and brought forward in the next Finance Bill, with effect from accounting periods beginning on or after 1 January 2026.

While a softening of Pillar 2 may be a welcome development for many businesses, there will be a period of uncertainty before the new regime is finalised. This is particularly the case for groups that are already effectively subject to rules that have yet to be published.