Key takeaways from the fourth UK NSIA annual report

On 22 July 2025, the UK Government published its fourth annual report covering the key trends in the operation of the National Security and Investment Act (NSIA) regime. It covers the period between 1 April 2024 and 31 March 2025.

What you need to know

• The UK Government has seen an increase of 26% in the number of NSIA notifications it received in 2024/25 compared to 2023/24.
• The defence sector remains the sector that is subject to the highest proportion of call-ins and final orders.
• The number of final orders issued increased from 5 in 2023/24 to 17 in 2024/25.

Background

The NSIA regime has been in force since January 2022. The regime gives the UK Government the power to review transactions on national security grounds, applying to both UK and non-UK investors. It replaced the previous pubic interest intervention regime for deals raising national security issues under the Enterprise Act 2002. Under the mandatory regime, certain transactions that fall within scope of (currently) 17 key sectors must be notified and scrutinised by the Government. Additionally, the NSIA provides for a voluntary regime which is underpinned by the Government's power to call in transactions that it considers may raise national security issues. For further background on the transactions caught by the regime, see our Quickguide.

The UK Government is required to publish an annual report on the operation of the NSIA regime, setting out key statistics and trends. In July 2025 the UK Government released its fourth annual report which covers the period between 1 April 2024 and 31 March 2025.

This latest annual report provides some useful insights into the areas the UK Government is particularly focused on from a national security perspective (albeit this is partly just a function of the deals that have come before it). As with previous years, the report demonstrates that both domestic and foreign investors are subject to scrutiny under the regime, particularly for transactions in the defence sector.

Number and type of notifications

During the reporting period the Government received a total of 1,143 notifications, representing an increase of more than 200 notifications compared with the previous reporting period (2023/24). These comprised:

• 954 mandatory notifications;
• 134 voluntary notifications; and
• 55 retrospective validation applications. Retrospective validations are required for completed transactions which should have received NSIA approval before completion, but did not.

The report showed that the Government accepted 1,110 notifications and rejected 37. There are a number of reasons why NSIA notifications may be rejected, such as using the incorrect notification form, failing to provide sufficient information or because the transaction does not qualify for review. As of 31 March 2025, 33 notifications were pending acceptance or rejection.

As was the case in the last reporting period, the largest proportion of notifications received related to the defence sector (56%, an increase from 48% in 2023/24), followed by critical suppliers to government (21%) and military and dual-use (19%). The UK remained the most frequent origin of investment, with 65% of notifications associated with acquirers from the UK, followed by 29% from the USA, and 6% from each of France and Luxembourg.

In total the Government reviewed 1,079 notifications over the reporting year, clearing 95.5% within the initial 30 working day review period. The remainder of the reviewed notifications (i.e. 4.5%) were issued with a call-in notice for a more in-depth review on the basis that the Government considered the transaction may raise national security concerns.

On average, the Government took seven working days to accept a mandatory notification, eight working days for a voluntary notification, and six working days for a retrospective validation application. The waiting times for rejections (with accompanying reasoning) were higher, with an average of 20 working days for mandatory notifications and 16 working days for voluntary notifications. No retrospective validation applications were rejected.

Call-ins

As noted above, 4.5% of notifications led to call-in notices during this reporting period (i.e. 56 transactions). These consisted of:

• 28 mandatory notifications;
• 20 voluntary notifications;
• 1 retrospective validation; and
• 7 non-notified acquisitions. This is an increase from 4 in the previous reporting period. This demonstrates that the Government is continuing to monitor for transactions that may present national security concerns but which have not been notified.

For transactions that were called in, the largest proportion involved acquirers associated with the UK (48%), followed by China (32%, despite Chinese acquirers representing well below 5% of all notifications accepted) and the USA (20%). The largest proportion related to the defence sector (36%), followed by military and dual-use (29%) and advanced materials (27%).

On average, it took 29 working days following acceptance for both mandatory and voluntary notifications to be called-in (i.e. call-ins were on average issued on the penultimate day of the initial review period). Following a call-in notice, it took an average of 24 working days to issue a final notification (confirming that no further action would be taken) and 70 working days to issue a final order (i.e. to impose remedies or prohibit a transaction).

Final orders

During the reporting period, 17 final orders were issued (including one for a non-notified acquisition) and there was one acquisition which the Government ordered must be unwound.

Of the final orders:

• 9 related to defence, 6 related to military and dual-use and 5 related to energy (some cases involved multiple sectors).
• 11 related to UK acquirers, 7 related to Chinese acquirers and 3 related to US acquirers (some cases involved acquirers from more than one jurisdiction).

This marks a significant increase in the number of final orders made compared with the 2023/24 reporting period, during which there were only five final orders. However, this should not necessarily be interpreted as a hardening of the Government's position as it could just be a function of the nature of the deals which came before it in the 2024/25 reporting period.

Comment

The latest annual report demonstrates the Government's continued focus on transactions in particular sectors, including defence, military and dual-use, advanced materials and energy. The report's foreword underscores this, noting the need to protect the UK's national interests against the backdrop of geopolitical instability, conflicts in the Middle East and Ukraine, and rapid acceleration of frontier technologies (e.g. artificial intelligence). However, the Government is also keen to emphasise that the UK is open for business, with a focus on encouraging investment and a growth economy in line with its Industrial Strategy.

The year ahead may bring some changes to the NSIA regime and its 17 key sectors. On the same day that the annual report was published, the Government announced proposed amendments to the regime in order to keep pace with new and evolving national security concerns. This included proposals to update the existing mandatory sector definitions (including, among others, advanced materials, artificial intelligence, communications, critical suppliers to government, data infrastructure and energy), create standalone mandatory sector definitions for critical minerals and semiconductors and add a new mandatory sector – water. In addition, the Government has said they intend to carve out the appointment of liquidators, special administrators and official receivers, and certain internal reorganisations from the scope of the mandatory regime. However, no specific proposals on these changes have yet been put forward (for further information see our July 2025 update).

The consultation on the amended/new mandatory sectors closes on 14 October 2025, after which the Government will consider stakeholder feedback before confirming any changes.