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Autumn Budget 2024: Corporation Tax – a boost to businesses

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The Labour government have said they are keen to bolster economic stability and growth by boosting investment in targeted areas. High on the agenda was the announcement that Corporation Tax (CT) would be capped at 25%. However, further measures involving Carried Interest and changes to the business rates system were also announced.

Carried Interest

Carried Interest is typically a performance related reward received by investors of private equity, venture capital and hedges funds paid when funds achieve a minimum return. In some cases, the sums involved can be substantial, particularly in highly successful transactions.

Historically, Carried Interest returns have been seen as enjoying a favoured tax treatment since it is essentially interest received by investors but taxed as a capital gain and thus, at lower rates when compared to income tax.

The changes announced in the Budget are to reform the way that carried interest is taxed. From 6 April 2026, all carried interest will be taxed as income and not capital and as an interim measure for the 12 months from April 2025, it will continue to be taxed as a capital gain but at the special rate of 32%.

Business rates

The government also announced its first steps to reform the business rates system. For retail, hospitality and leisure properties for 2025/26, 40% relief will be available up to a cash cap of £110,000 per business. From April 2026, it is intended that measures will be introduced to permanently lower the multipliers for the sector with rateable values of under £500,000 funded via higher multipliers on properties with rateable properties of more than £500,000 which include many of the large distribution warehouses used by the larger online businesses.

Longer term, the intention is to introduce further changes to deliver a fairer system of business rates fit for the 21st century and support smaller businesses and the high street.

Contact us

If you are affected by the measures above, please do not hesitate to contact Mark Pashley our Corporate and Business Tax Team and we will be happy to help, to support you and your business.

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