The UK Government has recently published its National Security and Investment Act 2021 (NSIA) Annual Report 2025-2026 (the Report), highlighting key trends in the UK’s Foreign Direct Investment regime. If you haven’t had time to read it, here are our key observations.

Doubling Down on Defence.

Defence remains the dominant sector for notifications, accounting for 58% of all filings (up from 56% in 2024–25). Military & Dual Use (23%) and Critical Suppliers to Government (20%) also remain in the top three. Given the breadth of the Defence notification criteria, this trend is unsurprising — and unlikely to change.

At call in stage, Defence again leads, accounting for 47% of call ins, with Critical Suppliers to Government and Military & Dual Use each at 33%. A sector which might not be on your notification radar? Higher Education: Despite not being a mandatory sector, it continues to be called in — voluntary notifications here remain prudent, particularly given the scale of foreign investment into UK universities.

Interestingly, when it comes to Advanced Materials and Data Infrastructure, which have similar notification proportions to last year, these sectors account for a higher proportion of call-ins and greater number of final orders - suggesting greater scrutiny in these sectors.

Too Little Too Late?

The number of retrospective validation notifications has increased by 8.5% from 47 to 51 in the last year. Instinctively, one would expect that as time went on, retrospective notifications would decrease as knowledge of the regime improved across the market. However, many businesses which were purchased during the first year of the NSIA are maturing to the point of onward sale, or seeking new investors, and due diligence processes are bringing missed notifications to light.

Transactions which should have been subject to a mandatory notification, but were completed without approval, are considered legally void, creating significant risk for new purchasers. In our experience, the ISU is becoming stricter when it comes to companies missing notifications and will require an explanation of the steps taken internally to ensure that any future qualifying acquisitions are correctly notified. After 4.5 years of the NSIA being in force, the risk of fines being imposed for missed notifications appears to be drawing closer.

Our tip? Ensure NSIA assessments for historic transactions are included in your legal due diligence.

Call In: Carry on or Can the Deal?

The vast majority of deals still never see the call-in process as 95% are cleared at the initial review stage. However, even if your deal is called in, all is not lost. Of the 60 call-ins this year (up from 54), 44 were cleared without conditions being required (noting that Call-in notices issued for voluntary notifications has almost halved since 2024/25, with the number for mandatory notifications almost doubling).

Our tip? Whilst frustrating, the practical impact of call-in in most cases is usually delay — an additional 30 working days plus any extension. Ensure your corporate documents allow sufficient time for NSIA approval if a call in occurs.

The Waiting Game: Timescales for Acceptance, Rejections and Call-Ins and Reviews

The Government aims to accept or reject NSIA notifications within 5 working days of receipt. However, the Report reveals that, on average, the ISU takes 11 working days to accept mandatory notifications, 13 working days for voluntary notifications and 10 working days for retrospective notifications.

Whilst this is higher than last year’s average time for acceptance, this is still below what we’ve seen in practice — with acceptances taking up to 17–18 working days.

Our tip? Use the ability to submit notifications pre exchange to avoid delays to completion..

No Home Team Advantage

For all of the accepted notifications (72%), call-ins (52%), final notifications (57%) and final orders (5/9), UK transactions represent the largest proportion in each category, followed then by either China or the US (plus Germany for final orders). It is a common misconception that UK to UK transactions are not caught by the NSIA – however UK transactions account for the majority of notifications subject to the NSIA regime.

Our tip? NSIA needs to be considered on all transactions, regardless of the nationality of the purchaser.

Key Takeaways for your Business

- The ISU is receiving more NSIA notifications year on year leading to delays in acceptance periods (up 15% this year), to avoid delaying transactions, prioritise NSIA review in your deal timetable;
- Retrospective notifications are on the rise: make sure you are capturing any potentially missed historic notifications in your due diligence of new acquisitions;
- the vast majority (95%) of transactions are still cleared within the 30-working day review period and only a very select few have conditions placed on them or are blocked altogether. Clearance rates for call ins remain high; and
- The UK, China and the US are still the most scrutinised origins of investment.

Upcoming NSIA changes

Later this year, the Government intends to enact forthcoming legislation that will:

- exempt certain acquisitions from mandatory notification;
- update the scope of the notifiable sectors;
- amend the Critical Minerals, Semiconductors, Artificial Intelligence and Communications schedules to reduce capturing low-risk notifications;
- amend the scope and definitions of the Critical Suppliers to Government, Data Infrastructure, Energy, and Suppliers to the Emergency Services schedules; and
- create a new schedule to cover acquisitions in the Water sector;

Whilst the Government hope these changes will reduce the number of notifications received, we expect that the volume will continue to increase. As seen with the Defence sector, which has a broad criteria for notification, if the Government widens the scope for other sectors (particularly Critical Suppliers to Government as a leading sector) it will capture more transactions each year.

For more information and advice, contact the Competition team.