Corporation tax rates
Corporation tax is charged at 25% (main rate) and 19% (small profits rate) for financial years 2023 and 2024. The Patent Box deduction formula will be amended to ensure the correct amount of relief is given for claimants that are subject to the small profits rate.
Companies incurring qualifying expenditure on the provision of new plant and machinery from 1 April 2023 until 31 March 2026 will be able to claim a 100% first-year allowance for main rate expenditure, or a 50% first-year allowance for special rate expenditure. These temporary allowances may be extended beyond 31 March 2026.
The £1 million limit for the annual investment allowance will be made permanent, as previously announced.
The first-year allowance for electric vehicle charge points is extended until 31 March 2025 for corporation tax and 5 April 2025 for income tax, also as previously announced.
Research and development (R&D)
A new credit rate will be available to loss-making companies whose R&D expenditure constitutes at least 40% of their total expenditure. From 1 April 2023, qualifying companies can claim a payable credit rate of 14.5% for qualifying R&D expenditure instead of the 10% rate under the existing R&D small and medium-sized enterprise (SME) scheme.
The R&D reliefs will be reformed, as previously announced, generally for accounting periods starting on or after 1 April 2023. There will be two new categories of qualifying expenditure for R&D relief – data licences and cloud computing services. Companies will have to inform HMRC of their intention to make a claim for R&D relief using a new digital form, unless they have claimed R&D reliefs in the previous three years. A digital additional information form will have to accompany claims made on or after 1 August 2023. The previously announced restriction on some overseas expenditure will come into effect from 1 April 2024 instead of 1 April 2023.
Visit ammu’s R&D Tax Credit Hub for helpful resources
Your business might be entitled to a valuable R&D tax credit – even if it doesn’t make a taxable profit. Check out the new position; you might be surprised what expenditure may now qualify and how much it could be worth to you.
Film, TV and video games reliefs
Refundable expenditure credits will replace the film, TV and video games tax reliefs. An audio-visual expenditure credit will cover the four existing film and TV tax reliefs. The existing specific eligibility criteria of each relief will be preserved. There will also be a video games expenditure credit.
- Video games, film and high-end TV will have a rate of 34%.
- Animation and children’s TV will have a rate of 39%.
The expenditure credits will be calculated directly from qualifying expenditure instead of being an adjustment to the company’s taxable profit as under the existing regime. The eligibility requirements for the video games expenditure credit will require 10% of expenditure to be on goods and services that are used or consumed in the UK.
Companies will be able to claim the credits for accounting periods ending on or after 1 January 2024. The current tax reliefs will close to new productions from 1 April 2025.
Theatres, orchestras, and museums and galleries
The current rates for theatre tax relief (TTR), orchestra tax relief (OTR) and museums and galleries exhibitions tax relief (MGETR) will be extended for two years, with TTR and MGETR remaining at 45% (for non-touring productions) and 50% (for touring productions). OTR rates will remain at 50%. The MGETR ‘sunset clause’ will be extended until March 2026.
From 1 April 2024, the definition of qualifying expenditure will change to ‘expenditure on goods and services that are used or consumed in the UK’ and the eligibility requirement for the reliefs will change to require a minimum 10% of expenditure to be on ‘goods and services used or consumed in the UK’.
Twelve investment zones will be established across the UK. Special tax sites in, or connected with, the investment zones may be designated subject to approval by the government. These sites will benefit from tax reliefs including SDLT relief (in England), enhanced capital allowance and structures and buildings allowances, and secondary Class 1 NIC relief.
Dividend tax allowance will fall from 6 April 2023 and again in April 2024. You may be able save tax if your company pays you a dividend in the current tax year.
Seed enterprise investment scheme (SEIS)
The amount of investment that companies will be able to raise under the SEIS will increase from £150,000 to £250,000, as previously announced. The gross asset limit will rise from £200,000 to £350,000 and the age limit on a qualifying trade will rise from two to three years. The annual investor limit will double to £200,000. The changes take effect from 6 April 2023.
Enterprise management incentives (EMI)
The process of granting share options will be simplified, removing the requirement for a company to set out details of share restrictions in the option agreement. The requirement for a company to declare an employee has signed a working time declaration will also be abolished. The changes will apply to EMI options granted or exercised from 6 April 2023.
Company share option plan (CSOP)
The limit on the value of CSOP share options issued to an employee will double to £60,000 and the restriction on share classes within the CSOP will be removed. The changes, which were previously announced, will take effect from 6 April 2023.
Large multinational groups with headquarters in the UK will have to pay a top-up tax if their operations in a foreign jurisdiction have an effective tax rate of less than 15%. The measure will also apply to non-UK-headquartered groups with UK members that are partially owned by third parties or where the headquartered jurisdiction does not implement the OECD Pillar 2 framework.
Corporate interest restriction
Legislation will address various issues in connection with the corporate interest restriction rules aimed at protecting Exchequer revenue, removing unfair outcomes and reducing administrative burdens for businesses. Changes will generally take effect for periods starting on or after 1 April 2023.
Real estate investment trusts (REIT)
Amendments will be made to the REIT regime, as previously announced. A REIT will no longer need to own at least three properties if it owns at least one commercial property worth £20 million or more. The rule for disposals of property within three years of significant development work will be amended and administrative burdens will be reduced for certain partnerships that invest in REITs.
Qualifying asset holding companies (QAHC)
The conditions that a company must meet to qualify as a QAHC will be amended to align better with the intended scope of the regime.