Wednesday 16 March 2016
UK: Budget day - business tax road map published
Today was the annual budget day in the United Kingdom and, included in the budget publications, was a road map for business taxation: see here (pdf). The headline proposal is a reduction in the rate of corporation tax to 17% in 2020. The road map also explains how the Government proposes to implement the 15 OECD BEPS actions, which includes the introduction on 1 April 2017 of a restriction on the deductibility of corporate interest expenses. The restriction will be achieved by a fixed ratio rule limiting the deduction (for corporation tax purposes) to 30% of a group's UK earnings before interest, tax, depreciation and amortisation.
Changes to the loss relief rules for companies are also proposed. More specifically, for losses incurred on or after 1 April 2017, relief will be available against profits from other income or from other companies within a group. A limit on the amount of relief available each year for losses carried forward will also be introduced: from 1 April 2017 it will be 50% of profits (but only where profits are in excess of £5 million).
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