The government had already pledged to lower corporation tax to 17% in 2020 and no further changes were announced in this respect as expected, due to increased focus on making the UK a prime location to invest.
Digital Services Tax
A new ‘Digital Services Tax’ (DST) is being announced from April 2020 as the government clearly attempts to tackle the lack of tax on the digital sector. The tax rate is only 2% and where UK users are over £25m pa and global revenues in excess of £500m pa. The government has stated this is a temporary measure as they wait for the G20 to introduce global measures.
Capital Loss Restriction
From April 2020 the government will restrict the proportion of annual capital gains that can be relieved by brought forward capital losses to 50%, which will bring it in line with income tax treatment. It is estimated that 99% of companies will be unaffected by this measure as an allowance of £5 million pa will be given before the new rules kick in.
New rules were introduced from April 17 in respect of corporate losses and it was announced the government will make amendments to these rules to ensure it is working in the manner they intended.
Intangible Assets Regime
Following a brief consultation, the government will seek to introduce a targeted relief for the cost of goodwill from April 2019. At the same time is it also seeking a reform of the de-grouping charge rules which apply when a group sells a company in the group owning intangible assets.
Research and Development Relief
A proposed change to reintroduce the cap in respect of PAYE /NIC paid in the period to the claimable tax credit for research and development is being brought back in. The proposal this time is to allow three times the limit on the PAYE /NIC paid which is higher than when previously in place.
A surprise announcement was the increase in the Annual Investment Allowance from £200,000 to £1 million for qualifying plant and machinery between Jan 19 and Dec 20 to help stimulate investment in the UK as we prepare for Brexit.
A new 2% allowance in respect of ‘Structures and Building Allowance’ (SBA) for non-residential buildings was also a big surprise, further details are to follow but memories of the abolished ‘Industrial Building Allowance’ spring to mind!
A reduction on the special rate pool from 8% to 6% from April 19 to allow the tax relief to more follow the accounting treatment.