Previous announcements on corporate taxes due to come into effect included;
- Reduced main rate of corporation tax to 21% from April 2014 and 20% from April 2015
- Small company rate to remain at 20% to give a unified rate from April 2015
- Replacement of the associated company rules with simpler rules based on a 51% group membership once the unified rate is in place.
New announcements in this Budget included;
- Annual Investment Allowance (AIA) – increase in the allowance to £500k from April 2014 and extended until 31 December 2015. The previous limit of £250k was due to expire on the 1 Jan 2015. Whilst we were expecting the period of the £250k limit to be extended the increase two fold of the limit was a welcomed surprise for businesses looking to invest in plant. In conjunction with new finance available for exporters this is a boost for the Midlands traditional manufacturing businesses.
- Capital allowances in Enterprise zones to be extended by 3 years until 31 March 2020.
- Enhanced capital allowances for zero emission goods vehicles will be extended to 31 March 2018.
Research & Development
The current payable tax credit for loss making SME companies has been extended from 11% to 14.5% from April 2014. Previously this has been reduced and is a huge boost for companies in the early stages of projects.
The construction industry has been hard hit in the recession and although we are seeing signs of recovery in this sector, finance continues to be an issue. The Government is creating ‘Builders Finance Fund’ of £500m to enable developers to loan the funds required to continue with housing development which had previously come to a halt due to difficulty in assessing finance.
Limited Liability Partnerships
During the Autumn Statement it was announcement the major changes to take place with corporate partners involved in LLPs which enable a reduced rate of tax to be obtained. The new rules will take effect from April 2014.