The UK Government’s latest annual report on the operation of the National Security and Investment Act 2021 (NSIA) provides a useful snapshot of how the regime is affecting transactions in the UK and serves as a timely reminder to businesses operating in, or acquiring businesses within sensitive sectors, of the importance of remaining compliant. Covering the period from 1 April 2025 to 31 March 2026, the report demonstrates continued growth in notifications being made, the government’s willingness to intervene in transactions, and the ongoing effort by the government to balance national security concerns associated with incoming investments into the UK.
Increased use of the National Security and Investment Act Regime (NSIA)
The Investment Security Unit (ISU), which administers the regime, received over 1,324 notifications during the reporting period, representing a significant increase from 1,143 in 2024/25, an increase of approximately 15%. The composition of filings continued to be the same, with mandatory notifications making up the majority of notifications (1,135), followed by voluntary notifications (147) and retrospective validation applications (42).
The increase in filings reflects the growing familiarity of NSIA among investors and advisers, as well as the heightened awareness of the UK’s national security screening requirements.
NSIA Call-In Notices and Transaction Clearances
A key finding from the government’s report was that most notifiable transactions do not raise a national security threat under NSIA. Of the 1,220 acquisitions reviewed during the reporting period, 95.6% of those were cleared with no further action required. The remaining 4.4% were called in for a detailed national security assessment. This has remained largely the same across the previous reporting periods.
Formal government intervention in transactions
The report highlights that formal intervention remains rare. During 25/26, the government issued 9 final orders following detailed assessments. Of those, 8 were permitted to proceed subject to conditions designed to mitigate national security risks, while only one acquisition was prohibited outright.
This is a significant decrease from the 17 final orders issued in the previous reporting period, and indicates that the Government remains willing to intervene in transactions where necessary.
Key sectors raising national security concerns:
Of the key 17 sectors currently subject to mandatory notification requirements, defence remains the most affected sector, representing 58% of all made in this reporting period, as well as the sector with the most call-in notices and final notifications being made.
Other areas attracting regular scrutiny included:
- Military and Dual-Use technologies;
- Critical Suppliers to Government;
- Advanced Materials; and
- Data Infrastructure.
Investor Origins and National Security Scrutiny
UK investors continued to account for the majority of notified acquisitions, with 72% of accepted notifications involving UK-linked acquirers. The United States remained the second most common source of investment.
However, acquisitions involving acquirers associated with China featured more prominently amongst transactions subject to detailed review. China was associated with 30% of called-in acquisitions and 32% of final notifications issued following assessment.
NSIA Processing Times and Regulatory Efficiency
The increase in notification volumes has had some impact on administration times. The median period between receipt and acceptance of a notification increased to 11 working days for mandatory notifications and 13 working days for voluntary notifications, compared with 7 and 8 working days respectively in the previous year.
Despite this increase, the Government reported that all decisions on whether to clear or call in notified acquisitions were made within the statutory 30 working day review period.
Businesses should therefore take these longer processing times into account to avoid delays in their transaction timetable.
Planned updates to the NSIA regime
A notable feature of the report is the Government’s commitment to refining the NSIA framework. The foreword confirms that further legislative changes are planned, including:
- exemptions for certain acquisitions from mandatory notification requirements;
- updates to the scope of the 17 notifiable sectors; and
- improvements to notification forms and processes.
These reforms are intended to reduce unnecessary burdens on businesses while ensuring that the regime remains effective in addressing evolving national security risks.
What Businesses Should Take Away from the Latest NSIA Annual Report
The latest NSIA Annual Report shows that, while notification volumes continue to increase, Government intervention remains relatively limited, with most transactions cleared without further action. Nevertheless, acquisitions involving sensitive sectors and technologies continue to attract close scrutiny, making early NSIA assessment an important part of transaction planning, particularly due to the severe consequences for businesses who do not comply, including transactions being rendered void, fines of up to ÂŁ10 million or 5% of worldwide turnover, and potential criminal liability.
Our Regulatory team has extensive experience advising clients across a broad range of sectors where NSIA issues can often be nuanced and highly fact-specific. By identifying issues early and providing clear, practical advice, we help clients minimise regulatory risk, avoid delays and progress transactions with greater certainty.
To understand how the NSIA regime may apply to your business transaction, please contact us.
