MTT09960 - Reference materials: Table of differences between Domestic Top-up Tax and Multinational Top-up Tax
Source: gov.uk (2025-08-05)


Domestic Top-up Tax (DTT) is given effect in the legislation by applying the MTT rules in Part 3 Finance (No.2) Act 2023, with some modifications. These modifications are laid out in Part 4 Finance (No.2) Act 2023.

The table below provides references where the MTT legislation applies differently for DTT purposes.

In some cases the modification only applies for single entities, and not groups. The table is set out in sections to indicate this.

Differences applicable to both groups and single entities

MTT Legislative Reference (Part 3 F(No.2)A23 unless noted)

Change

DTT Legislative reference

(Part 4 F(No.2)A23 unless noted)

Effect/comments

HMRC guidance reference

Chapters 1, 2, 7

Not applied

Section 266;

Section 267;

Section 267A;

Section 268;

Section 268A;

Section 269;

Section 270;

Section 271

The provisions in these chapters are replaced with equivalent provisions in Part 4 F(No.2)A23.

MTT01200 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt01200) (overview);

MTT10020 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt10020) (scope);

MTT10030 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt10030) (excluded entities);

MTT65000 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt65000)+ (chargeability)

Section 141

Additional provision

Section 273C

For wholly-domestic groups and entities only, dividends or other distributions received from a protected cell company are treated as an excluded dividend.

MTT10140 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt10140);

MTT21140 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt21140)

Section 184;

Section 185;

Section 187;

Section 205

Difference in application

Section 273B

Explains how the application of the rules upon entering Pillar Two differ for DTT.

MTT09150 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt09150)

Section 185

Difference in meaning of term

Section 273A

Alters meaning of “Pillar Two rules apply”.

MTT09150 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt09150)

Section 187

Difference in meaning of term

Section 273A

Alters meaning of “Pillar Two rules apply”.

MTT09150 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt09150)

Section 173(1)(b);

Sections 189-192

Omission

Section 272(4)(a)l;

Section 273(3)(pa) and (v)

Not applicable to DTT – Eligible distribution tax systems.

MTT01210 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt01210)

Chapter 9A

Omission

Section 272(4)(c)

Section 273(4)(z1)

Not applicable to DTT – Undertaxed profits rule

MTT62000 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt62000)+

Section 182(2)(e)

Difference in application

Section 272(8)(da);

Section 273(3)(ba)

Amounts of expense relating to generation or use of qualifying refundable tax credits are not to be excluded from the deferred tax expense.

MTT27150 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt27150)

Section 193

Difference in application

Section 272A

Top-up amounts are not allocated to covered bond vehicles where possible.

Section 194(2)-(7);

Section 203(3)-(7);

Section 206(4)-(8)

Omission

Section 272(3)(a)-(c); section 273(3)(c)-(e)

Prevents circularity as these subsections concern deduction of QDMTT amounts.

MTT31020 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt31020)

Schedule 14, Part 11

Difference in application

Schedule 18, paragraph 5

Penalties for failing to register are applied by Finance Act 2008, and penalties for errors are applied by Finance Act 2007.

Schedule 16

Difference in application

Section 276

The transitional safe harbour is applied differently for wholly domestic groups and entities.

MTT15980 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt15980)

Differences only applicable to entity that is a member of a group

MTT Legislative Reference (Part 3 F(No.2)A23 unless noted)

Change

DTT Legislative reference

(Part 4 F(No.2)A23 unless noted)

Effect/comments

HMRC guidance reference

Chapters 3-6, 8 and 9;

Schedule 14, Part 2-12;

Schedule 16

Change in terminology

Section 272(2);

Schedule 18, paragraph 4(c);

Section 276

Read “group” instead of “multinational group”

N/a

Section 134(2)-(3)

Additional provision

Section 272(8)(a)

134(3A) and (3B) insert an election that allows wholly-domestic groups to use UK GAAP as an alternative accounting standard even where conditions in 134(3) are not met.

MTT21020 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt21020)

Section 176(2)(i)

Substitution

Section 272(8)(b)

Where amounts of tax expense are reallocated from one group member to another, they are only to be included in the covered tax balance if they were reallocated under section 178(1).

MTT25210 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt25210)

Section 178(1A)

Substitution

Section 272(8)(c)(i)

Prevents the allocation of a qualifying tax expense imposed by a non-UK territory under section 167 (hybrids).

MTT41470 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt41470)

Section 178(2)

Omission

Section 272(8)(c)(ii)

Reallocation of tax expense for hybrid, transparent and reverse hybrid entities is capped in relation to mobile income. This cap does not apply for DTT purposes.

MTT41470 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt41470)

Section 179(2)

Omission

Section 272(8)(d)

Reallocation of tax expense to CFC from CFC owner is capped in relation to mobile income. This cap does not apply for DTT purposes.

MTT25500 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt25500)

Section 193

Substitution

Section 272(3A)

A different mechanism is used to determine the top-up amount of an entity.

MTT31100 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt31100)

Section 193

Difference in application

Section 272(3A) (Substituted section 193A(2))

section 272(9)-(11)

Top-up amounts of investment entities are included with the top-up amounts of standard members for charging purposes.

MTT31100 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt31100)

MTT45210 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt45210)

Section 225

Omission

Section 272(4)(b)

Top-up amounts of investment entities are included with the top-up amounts of standard members for charging purposes.

MTT31100 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt31100)

MTT45210 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt45210)

Paragraph 2(4), schedule 16

Difference in meaning of term

Section 273A(2)(d)

Alters meaning of “Pillar Two rules apply”.

MTT09150 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt09150)

Differences only applicable to single entities

MTT Legislative Reference (Part 3 F(No.2)A23 unless noted)

Change

DTT Legislative reference

(Part 4 F(No.2)A23 unless noted)

Effect/comments

HMRC guidance reference

Chapters 3-6, 8 and 9;

Schedule 14, Parts 4-12;

Schedule 16

Change in terminology

Section 272(2);

Schedule 18, paragraph 4(d);

Section 276

Read “entity” instead of “multinational group” or “member of a multinational group”.

N/a

Section 132

Substitution

Section 273(2)

To determine the ETR of a single entity, a different step-by-step process is required.

MTT20100 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt20100)

Section 249

Difference in meaning of term

Section 273(3)(b)

A single entity will not have consolidated financial statements. The concept of “qualifying financial statements” in 266(10) takes its place.

MTT09520 (https://www.gov.uk/hmrc-internal-manuals/multinational-top-up-tax-and-domestic-top-up-tax/mtt09520)

Various

Omission

Section 273(4);

Schedule 18;

Section 276(c)(iii)

Omits various sections, subsections and paragraphs that would have no application for a single domestic entity.

These omissions are not generally specified in guidance as they have no practical effect.