Budget 2012 - business tax changes
The Chancellor has only just sat down but some of the key business tax points are:
- Corporation tax rate to reduce to 24% from April 2012, to 23% from 2013 and 22% from 2014. The lower rate for smaller companies remains at 20%.
- The maximum amount that companies may raise under Enterprise Investment Scheme in any one year will be increased from £2million to £5million, with effect from next month. This increase is actually a reduction from the previously announced £10million.
- A new Seed Enterprise Investment Scheme (“SEIS”) will be introduced, providing income tax relief of 50 per cent for individuals who invest in shares in qualifying companies. In addition, gains realised on the disposal of assets in 2012–13 that are invested through SEIS in the same year will be exempt from capital gains tax.
- Controlled Foreign Companies rules to be reformed, this year to “better reflect the way that businesses operate in a globalised economy”.
- “Patent Box” to be introduced from April 2013, which will apply a reduced 10 per cent rate of corporation tax for profits attributed to patents and similar types of intellectual property.
- As previously announced, the R&D tax credit for most companies will be based on 225% of the company’s qualifying expenditure, with effect from the start of next month. There will now be no lower expenditure limit (was £10,000) and, for those companies looking to ‘sell’ their losses, there is no restriction on the amount that may be sold (was restricted to the company’s PAYE bill for the period in question).
- Subject to EU approval, the Enterprise Management Incentive share option scheme will be reformed to remove some restrictions for academics engaged in start up companies and to increase the individual limit to £250,000 (currently £120,000).
- Again subject to EU approval, corporation tax reliefs to be introduced for the video games, animation and high-end television industries from April 2013.
- 100% capital allowances to be offered on plant and machinery investment made in designated Enterprise Zones, from 1 April 2012.
- 100% first year allowances (“FYAs”) for businesses purchasing low emissions cars will be available for a further two years, to 31 March 2015.
- The carbon dioxide emissions threshold, below which cars are eligible for FYAs will also be reduced, from 110 grams/kilometre to 95 grams/kilometre, from April 2013.
- The carbon dioxide emissions threshold for the main rate of capital allowances for business cars will be reduced from 160 grams/kilometre to 130 grams/kilometre, again from April 2013.
- From April 2013 a new cash basis for calculating tax for small unincorporated businesses, will be introduced.
David Mansell is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with David you can call him on (0)1908 605552.
Date: 21st March, 2012
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