News: April 2015
Single 20% corporation tax rate
A single corporation tax rate of 20% will apply from 1 April 2015 whatever the level of your company’s profits.
As already announced in the 2014 Autumn Statement there will be a new 25% rate of tax on profits artificially diverted by multi-national companies away from the United Kingdom, being labelled “Google Tax”.
Annual investment allowance
The Annual Investment Allowance (AIA) provides a 100% tax write off for the cost of most plant and machinery acquired by businesses, a notable exception being motor cars. In Budget 2014 the Chancellor announced that the allowance would be increased to £500,000 per annum for expenditure incurred between 1 April 2014 and 31 December 2015 (from 6 April 2014 for unincorporated businesses).
This generous allowance was due to fall to just £25,000 from 1 January 2016 and the Chancellor acknowledged that such a level would be too low. However, the new limit will not be announced until later this year. Remember that the AIA is available for assets bought on hire purchase as well as those bought for cash. It can also be claimed in respect of fixtures and fittings within buildings. Contact us to help you maximise tax relief for capital expenditure as the timing of expenditure can be critical.
R&D tax credit rate increased
As already announced in the 2014 Autumn Statement, companies that are Small and Medium sized Enterprises (SMEs) carrying out qualifying Research and Development can currently claim a corporation tax deduction of 225% of their qualifying spend. This relief is being increased to 230% with effect from 1 April 2015. In order to improve the cash flow of loss making SMEs the tax rules allow the company to surrender the loss attributable to the enhanced R&D spend for a tax refund. The current tax refund rate is 14.5% of the loss attributable to the enhanced expenditure. Contact us if you would like to discuss whether your company could qualify for R&D tax relief.