Business Tax Roadmap
Aside from the National Insurance changes, very little has changed in the business taxes area of huge significance. However the Budget did see, as promised, the release of a “Business Tax Roadmap” setting out the various areas of commitment for the duration of this parliament.
Much of this was already known but the key points are:
- Capping the headline Corporation Tax Rate at 25%
- Retaining small profits rate (19%) and marginal relief rates and thresholds at current level.
- Maintaining current Capital Allowances system, primarily the full expensing rules for limited companies, and £1 million Annual Investment Allowance for all businesses. They will also continue to look into expanding full expensing to assets used for leasing.
- Maintaining the current rates of R&D Tax Reliefs, as well as consulting on widening the use of advance clearances for R&D claims.
There is also a commitment to work collaboratively with businesses on simplification and digitisation, suggesting that the Making Tax Digital project is by no means dead in the water.
In addition, they are committing to develop a “new process” for increasing tax certainty in advance of major investment decisions.
R&D
As expected, there were no changes to headline rates or workings of the scheme. However we have seen the publication of a couple of documents regarding the government’s approach to the scheme, including their compliance approach. Numbers of HMRC enquiries into R&D claims are at an extremely high level and have been widely criticised for the use of inexperienced officers using template refusals of claims.
This enquiry activity is likely to be the main driver behind a significant reduction in the number of claims by small and medium size businesses (55,325 in 2022-23, down from 71,905 the year before).
We have already been advising new entrants into the R&D claim regime that seeking advance assurance is beneficial in order to obtain certainty before submitting a claim, so it is good to see that the government is looking to expand this facility.
Capital Allowances
The current 100% allowance on new and unused zero emission cars was due to end on 31 March 2025. This has been extended for a further year to 31 March 2026.
Benefit In Kind (BIK) rates on such vehicles are set to increase from 2% in 24/25 to 5% in 2027/28 (a 1% increase per year). This has now been extended by a further 2% increase in 2028/29 to 7%, and 2% more in 2029/30 to 9%.
If you have any questions about how the budget or its proposed reforms might affect you, do get in touch on 01242 776000 or tax@randall-payne.co.uk.
