Corporation tax rate
The rate of corporation tax will remain at 19% and will not fall to 17% in 2020, as had been planned.
Structures and buildings allowance
The annual rate of capital allowances for qualifying investments to construct new, or renovate old, non-residential structures and buildings will increase from 2% to 3%, from 1 April 2020 for corporation tax and 6 April 2020 for income tax.
Research and development (R&D)
The rate of R&D expenditure credit will increase from 12% to 13% from 1 April 2020.
The government will consult on whether expenditure on data and cloud computing should qualify for R&D tax credits.
The introduction of the PAYE cap on the payable tax credit in the R&D schemes for SMEs will be delayed until 1 April 2021, following consultation last year. There will be further consultation on changes to the cap’s design to ensure it targets abusive behaviour, while also ensuring that eligible businesses can access the relief.
First year allowances for business cars
Only zero emission vehicles will qualify for first year allowances from April 2021. The main rate of writing down allowance (WDA) of 18% will be given for cars with emissions up to 50g/km. The 6% WDA rate will apply to cars with emissions above 50g/km. First year allowances for zero emission goods vehicles and natural gas and hydrogen refuelling equipment will be extended until 2025.
Corporate capital loss restriction
The proportion of annual capital gains that can be relieved by brought-forward capital losses will be restricted to 50% from 1 April 2020, on similar lines to the corporate income loss rules. An allowance will give companies unrestricted use of up to £5 million capital and/or income losses each year. Certain companies in liquidation will be excluded from the scope of the restriction.
Non-UK resident companies with UK property income
Non-UK resident companies will be charged corporation tax on their UK property income from 6 April 2020, under legislation enacted in Finance Act 2019. Further legislation will ensure these rules work as intended to provide a smooth transition of the taxation of UK property profits from income tax to corporation tax.
Digital services tax
A new 2% tax will be charged from April 2020 on the revenues of certain digital businesses that derive value from their UK users. The tax will apply to revenues generated from the provision of search engines, social media platforms and online marketplaces, where those activities are linked to the participation of UK users and will be subject to an annual allowance of £25 million.
The tax will only apply to groups that generate global revenues from in-scope business activities of more than £500 million a year. It will include a safe harbour provision that will exempt loss makers and reduce the effective rate of tax on businesses with very low profit margins.
Private use of company vehicles
The fuel multiplier for 2020/21 will be £24,500 for cars. For vans, the fuel chargeable amount will be £666.
For zero-emission vans, the van benefit charge will be nil from April 2021.
From 6 April 2020, fuel benefit charges and the van benefit charge will increase in line with the consumer prices index (CPI) rather than the retail price index (RPI).
The pre-2002 exclusion from the Intangible Fixed Assets regime will be removed. This means that tax relief for the cost of acquiring corporate intangible assets from 1 July 2020 will be provided under a single regime subject to restrictions to prevent tax avoidance.
The Budget included several reliefs from business rates, some of them temporary in response to coronavirus.
- The retail discount for properties with a rateable value below £51,000 in England will be increased to 100% for 2020/21 and will be expanded to include hospitality and leisure businesses for 2021.
- There will be a discount of £5,000 for pubs in England with a rateable value below £100,000 for one year from 1 April 2020.
- The £1,500 discount for office space used by local newspapers in England will be extended until 31 March 2025.
- A fundamental review of business rates will call for evidence in the spring and report in the autumn.
Time to Pay
Tailored arrangements will be available to give a business the time it needs to pay HMRC. The aim is to support the business’s recovery while operating through any temporary financial challenges that occur, for example as a result of the coronavirus pandemic. HMRC will also waive late payment penalties and interest where a business experiences administrative difficulties because of coronavirus in trying to contact HMRC or pay taxes.
Enterprise management incentives (EMI) scheme
The EMI scheme will be reviewed to ensure it provides support for high-growth companies to recruit and retain the best talent.
Plastic packaging tax
A new tax will be introduced from April 2022 to incentivise the use of recycled plastic in packaging. The rate will be £200 per tonne of plastic packaging that contains less than 30% recycled plastic. It will apply to the production and importation of plastic packaging.
The entitlement to use red diesel and rebated biofuels will be removed from April 2022 except for agriculture (including horticulture, pisciculture and forestry), rail and non-commercial heating.
Tax guidance for self-employed people
To make it easier for self-employed individuals to navigate the tax system, the government will this summer launch new interactive online guidance for taxpayers with non-PAYE income.
Your business might be entitled to a valuable research and development (R&D) tax credit – even if it doesn’t make a taxable profit. Check out the position; you might be surprised what expenditure can qualify and how much it could be worth to you.
If you want to take advantage of Time to Pay, make sure that you have adequate records to justify your claim to HMRC.
Company car tax rules change from 6 April 2020. Make certain you – and anyone you employ – are aware of the consequences.