Farley And Partners

BUSINESS

CORPORATION TAX RATES

The corporation tax rate will reduce from 20% to 19% from 2017. A further reduction to 18% will follow in 2020.

CORPORATION TAX RATES 
1 April 2015 to 31 March 2017  20%
 1 April 2017 to 31 March 2020 19% 
From 1 April 2020  18% 

 

CORPORATION TAX PAYMENT DATES

For accounting periods starting on or after 1 April 2017, the government will introduce new corporation tax payment dates for companies to pay in quarterly instalments in the third, sixth, ninth and twelfth months of their accounting period.

This measure affects companies with annual taxable proits of £20 million or more. Where a company is a member of a group, the £20 million threshold will be divided by the number of companies in the group.

ANNUAL INVESTMENT ALLOWANCE

The annual investment allowance for all qualifying investment in plant and machinery made on or after 1 January 2016 will be £20,000. The allowance is currently £500,000.

EMPLOYMENT ALLOWANCE

From April 2016, there will be an increase in the annual employment allowance from £2,000 to £3,000.

Companies where the director is the sole employee will no longer be eligible to claim the employment allowance from April 2016.

RESTRICTION OF CORPORATION TAX RELIEF

The corporation tax relief a company may obtain for the cost of ‘goodwill’, such as the amount paid for the reputation or customer relationships of the business purchased, will be restricted for all acquisitions and disposals on or after 8 July 2015.

This measure removes the tax relief that is available when structuring a business acquisition as a business and asset purchase so that goodwill can be recognised and amortised over time. This advantage is not generally available to companies which purchase the shares of the target company. Removing this relief reduces this distortion and levels the playing ield for merger and acquisition transactions.

R&D TAX CREDITS: UNIVERSITIES AND CHARITIES

A measure to amend an anomaly in the R&D tax credits legislation was announced so that universities and charities are unable to claim R&D credit, in line with the original intention of the policy. This will apply to expenditure incurred from 1 August 2015.

CONTROLLED FOREIGN COMPANIES LOSS RELIEF RESTRICTION

From 8 July 2015, the government will remove the ability for companies to use UK losses and reliefs against a controlled foreign company charge.

This change should improve the effectiveness of the controlled foreign company regime in both deterring the diversion of proits and taxing any diverted proits.

DISPOSAL OF STOCK OTHER THAN IN TRADE

Amendments are to be made to the legislation to stop corporate groups from using a transfer pricing override to manipulate the value of assets in intergroup transfers.

The changes relating to trading stock and intangible assets have been introduced to ensure that disposals made other than in the normal course of business are brought into account for tax purposes at full market value.

TAXATION OF CARRIED INTEREST

The government will introduce legislation to ensure that sums which arise due to investment fund managers by way of carried interest will be charged to the full rate of capital gains tax, with only limited deductions being permitted. This measure will be effective from 8 July 2015.

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