Draft Finance Bill 2013 - Corporation tax rate cut heads list of useful measures for business, says Stella Amiss
December 11, 2012
The Autumn Statement highlighted the importance of keeping the UK competitive and an attractive place to do business. The additional 1% reduction to the main rate of corporation tax backed this up. The statutory wording to give effect to that change is included in the draft Finance Bill 2013. From 1 April 2014 the main rate will fall to 21% rather than the 22% previously announced in Budget 2012. That follows its reduction in April 2013, as previously announced, to 23%.
Among a host of other announcements in the Autumn Statement of rates and threshold changes, you will probably be most interested in the changes for capital in the draft Finance Bill legislation.
From 1 January 2013 the first £250,000 of investment annually by businesses in plant and machinery will attract 100% capital allowances. This is a temporary, but significant, increase from the previous annual allowance of £25,000 and in January 2015 the allowance will return to £25,000. Investment in a wide range of capital assets qualifies – covering plant and machinery, fixtures and certain building spend. The temporary increase is a clear encouragement for smaller businesses to invest and achieve a 100% tax deduction. Spend on cars does not qualify and only one allowance is available each year to groups or associated businesses. To deal with the increase in the allowance in January 2013 - and the return to the lower limit in 2015 - the allowance will be apportioned between different periods on a time basis, so you should check the timing of proposed investment projects.
These changes will have immediate impact for businesses in computing deferred tax provisions and disclosures at 31 December 2012 and beyond.
Stella Amiss is a corporate tax partner.