Corporation tax rates
The corporation tax rate will be reduced from 20% to 19% in financial year 2017 and to 18% in 2020.
Corporation tax payment dates
There will be new payment dates for companies with annual taxable profits of £20 million or more. For periods starting after 31 March 2017, such companies will have to pay quarterly instalments in the third, sixth, ninth and twelfth months of their accounting period. Where a company is a member of a group, the £20 million threshold will be divided by the number of companies in the group.
The government will consult on the rules for company distributions in autumn 2015.
Annual investment allowance (AIA)
The level of the AIA (currently £500,000) will be set at £200,000 for all qualifying expenditure on plant and machinery made on or after 1 January 2016.
Business goodwill amortisation
The government will restrict the corporation tax relief a company may obtain for the cost of goodwill. This will affect all acquisitions and disposals from 8 July 2015.
Research and development (R&D) tax credits
Charities and universities will no longer be able to claim the R&D expenditure credit for expenditure from 1 August 2015.
National insurance contributions (NICs) employment allowance
From 6 April 2016 the government will increase the annual NIC employment allowance from £2,000 to £3,000. Where the director of a company is the sole employee, the company will not be able to claim the allowance from April 2016.
Orchestra tax relief
As announced in the March 2015 Budget, tax relief will be available to orchestras at 25% on qualifying expenditure from 1 April 2016.
Corporate debt and derivative contracts
Wide-ranging changes will modernise the corporation tax rules on corporate debt loan relationships and derivative contracts. They include clarifying the relationship between tax and accounting, basing taxable loan relationship profits on accounting profit and loss entries, a new ‘corporate rescue’ relief and new anti-avoidance rules. The changes will generally take effect for accounting periods starting after 31 December 2015.
Business tax future changes
The government will publish a ‘business tax roadmap’ by April 2016 setting out its plans for business taxes over the rest of the parliament.
There will be a supplementary tax on banking sector profits of 8% from 1 January 2016. The full bank levy rate will be reduced gradually to 0.10% in 2021. Compensation expenses relating to a bank’s widespread misconduct and mis-selling incurred after 7 July 2015 will not be deductible for corporation tax purposes.
VAT on services used and enjoyed in the UK
The government will apply VAT ‘use and enjoyment’ provisions, so that from next year it will be clear that all UK repairs made under UK insurance contracts will be subject to VAT in the UK. The government is considering a wider review of offshore-based avoidance in VAT exempt sectors, with a view to introducing additional use and enjoyment measures for services such as advertising in the following year.
Insurance premium tax (IPT)
The standard rate of IPT will increase from 6% to 9.5% from 1 November 2015 for insurers using the IPT cash accounting scheme. For insurers using the special accounting scheme, premiums relating to policies entered into before 1 November 2015 will continue to be liable to IPT at 6% until 29 February 2016, after which all premiums received by insurers will be taxed at 9.5%.
Vehicle excise duty (VED)
A new VED banding system will be introduced for cars registered after 31 March 2017. First year rates will depend on the carbon dioxide emissions of the vehicle, ranging from £0 for cars with zero CO2 emissions to £2,000 for CO2 emissions over 255g/km. After the first year there will be a flat standard rate of £140 for all cars except those with zero emissions, which will continue to pay £0. Cars with a list price above £40,000 will attract a supplement of £310 a year for the first five years in which the standard rate is paid.
Company car tax rates
As announced in the March 2015 Budget, the appropriate percentage of list price subject to tax will increase by three percentage points for cars emitting more than 75g/km of CO2 to a maximum of 37% in 2019/20. There will be a three percentage point differential between the 0–50g/km and 51–75g/km bands and between the 51–75g/km and 76–94g/km bands.
SAVER – The AIA this year is £500,000; from January 2016 it’s only £200,000. So plan your capital expenditure carefully.
THINK AHEAD – Directors of one-person companies won’t be able to claim the NIC employment allowance of £3,000 next tax year – so consider employing someone.
SAVER – Save insurance premium tax – renew your cover and pay by annual premium before 1 November 2015.
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