Budget 2018 – Corporation Tax Rates & Capital Allowances

Corporation Tax Rates

Corporation tax rates have already been enacted for periods up to 31 March 2021.

The main rate of corporation tax is currently 19% and will remain at this rate for next year.

The rate will fall to 17% for the Financial Year beginning on 1 April 2020.

Annual Investment Allowance

The government has announced an increase in the Annual Investment Allowance for two years to £1 million in relation to qualifying expenditure incurred from 1 January 2019.

Complex calculations may apply to accounting periods which straddle this date.

Chartered Tax Adviser Liz Fisher commented that “this short-term measure is a welcome boost as a means of trying to encourage business investment. It will benefit companies and groups whose annual capex spend exceeds the current threshold of £200,000 but will not assist the many SME’s who don’t spent more than £200,000 per annum on plant & machinery”

Other Changes

A number of changes are made to other rules relating to capital allowances:

  • a reduction in the rate of writing down allowance on the special rate pool of plant and machinery, including long-life assets, thermal insulation, integral features and expenditure on cars with CO2 emissions of more than 110g/ km, from 8% to 6% from April 2019. Complex calculations may apply to accounting periods which straddle this date
  • clarification as to precisely which costs of altering land for the purposes of installing qualifying plant or machinery qualify for capital allowances, for claims on or after 29 October 2018
  • the end of the 100% first year allowance and first year tax credits for products on the Energy Technology List and Water Technology List from April 2020
  • an extension of the current 100% first year allowance for expenditure incurred on electric charge-point equipment until 2023.

 

If you wish to discuss how these changes impact your business, please contact one of our Chartered Tax Advisers.