The 2015 Summer Finance Bill - Business tax

  • Corporation tax rates: reducing to 19% from 1 April 2017 and to 18% from 1 April 2020.
  • Tax lock for VAT: standard and reduced rates of VAT will not be able to rise above their 2015/16 levels in the current Parliament.
  • Capital allowances: Annual Investment Allowance: permanent level of allowance increased to £200,000 for qualifying investment in plant and machinery made on or after 1 January 2016.
  • Research and development (R&D tax credits): universities and charities: an anomaly in the legislation is corrected so that universities and charities are not able to claim the R&D expenditure credits, in line with the original policy intention. This applies to expenditure from 1 August 2015.
  • Modernisation of the taxation of loan relationships and derivative contracts: legislation to modernise aspects of the corporation tax rules governing the taxation of loan relationships and derivative contracts introduced. The changes will generally take effect for accounting periods commencing on or after 1 January 2016.
  • Restriction of corporation tax relief for business goodwill amortisation: for all acquisitions and disposals on or after 8 July 2015 the corporation tax relief a company may obtain for the cost of goodwill is restricted.
  • Consortium link company rule: with effect from 10 December 2014 all requirements relating to the location of the ‘link company’ for consortium claims to group relief are removed.
  • Controlled Foreign Companies (CFC) loss relief restriction: from 8 July 2015 companies will no longer be able to use UK losses against a CFC charge.
  • Disposal of stock other than in trade: legislation relating to trading stock and intangible assets is amended to ensure that disposals made otherwise than in the normal course of business are brought into account for tax purposes at full open market value, with effect from 8 July 2015.
  • Taxation of carried interest – base cost shifting and cherry picking: effective from 8 July 2015, this legislation will ensure that sums which arise to investment fund managers by way of carried interest will be charged at the full rate of capital gains tax, with only limited deductions being permitted.
  • Elections for designated currency by investment companies: amendments from 1 January 2016.
  • Disguised investment management fees: minor changes from 8 July 2015.
  • Banks
    • Main rate of bank levy reduced from 0.21% to 0.18% in 2016, 0.17% in 2017, 0.16% in 2018, 0.15% in 2019, 0.14% in 2020 and 0.10% in 2021 onwards.
    • A supplementary tax on banking sector profits of 8% introduced from 1 January 2016. The tax will apply to banks’ corporation tax profit before the use of any .existing carried-forward losses or group relief from a non-banking company. The tax will not apply to the first £25 million of profit within a group.
    • Compensation expenses relating to banks’ mis-selling made non-deductible for corporation tax purposes for expenses incurred on or after 8 July 2015.
    • The £25 million allowance for building societies within the bank loss relief legislation is extended to cover banks incorporated under the Savings Bank (Scotland) Act 1819.
    • Changes made to the definition of banking companies within the bank levy and bank loss relief restriction legislation to ensure it is aligned with regulatory standards.

Related links

Personal tax
Venture capital schemes
Inheritance tax
Administration and enforcement
Other taxes

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