The Supreme Court’s December 2025 ruling reaffirmed the BLP barrier, stating that VAT incurred on fees for share sales remains non‑deductible because of a direct and immediate link to an exempt supply. The decision effectively ends the argument that share‑sale proceeds can be used to recover VAT on overheads. Businesses must therefore plan VAT recovery strategies early and seek specialist advice before raising capital through share sales.
The VATfaqs digest
Global VAT news, delivered Tuesday and Thursday. Free, curated from 50+ official sources, no spam.
No spam · Unsubscribe any time
Energy Digital · about 8 hours ago
UK: New Prime Minister Andy Burnham will cut VAT on electricity bills from the start of October, exempting households in England, Scotland and Wales for six months. The measure will reduce average household bills by about £45 and cost the Treasury roughly £850m this financial year.
TaxResearch · 1 day ago
The UK will remove VAT from electricity bills from October, cutting average annual bills by about £45 per household. The move is expected to reduce tax revenue by roughly £1.1 billion, but critics argue it does not address underlying grid capacity issues.
Guardian · 1 day ago
The UK government will remove VAT from electricity bills for households in Great Britain from 1 October 2026, reducing the annual price cap by £45. Northern Ireland will retain the 5% VAT rate, and the cut does not apply to gas.
VatCalc · 1 day ago
The United Kingdom has announced that domestic electricity bills will be zero-rated from 1 October 2026, reducing the VAT rate from 5% to 0%. The measure is temporary, applying until 31 March 2027, and will be funded by cancelling the planned Digital ID programme.
The Independent · 2 days ago
The UK government will remove VAT from domestic electricity bills from 1 October 2026, cutting the rate from 5% to 0%. The change is expected to save households around £45 a year and will be funded by cancelling the Digital ID programme.
The Independent · 2 days ago
In the UK, the government announced an £850 million tax cut on energy bills, making electricity bills VAT free from 1 October 2026 in England, Scotland and Wales. Northern Ireland remains exempt because EU VAT rates apply under the Windsor Framework, preventing the cut from applying there.
Put your brand alongside trusted tax-tech intelligence across 150+ countries.
Key Takeaways
In December 2025 the Supreme Court held that the "direct and immediate link" test is the primary method for determining VAT deductibility, reaffirming the BLP barrier and confirming that VAT on share‑sale fees remains non‑recoverable.
No, the ruling confirms that VAT incurred on fees for disposing of subsidiaries through share sales remains an absolute cost and cannot be recovered.
It is the objective test used to determine VAT deductibility, requiring a direct and immediate link between the input services and the exempt supply; the Supreme Court emphasized that the economic purpose of the transaction is irrelevant.
Businesses must plan VAT recovery strategies early, seek specialist advice, and understand that VAT on share‑sale fees will not be recoverable under current law.
Primary source
Read the full article at ICAEWThis summary was published on VATfaqs.com on 5 March 2026. It relates to VAT developments in United Kingdom. The original source is ICAEW.
