2012 Chancellors Autumn Statement – Principal Changes – Business tax

Corporation Tax
In addition to the Budget 2012 announcement, the main Corporation Tax (CT) rate for Financial Year 2014 will be reduced by a further 1% to 21%. As already announced, the main CT rate for Financial Year 2013 is 23% and the Small Profit rate is 20%.

Annual Investment Allowance
In the hope that businesses will increase investment, the Annual Investment Allowance will be increased from £25,000 to £250,000 per annum for a 2 year period commencing 1 January 2013. This is a tenfold increase. The Annual Investment Allowance provides a 100% write off for purchases of qualifying equipment. This could include plant, computer equipment, furniture, vans and other fixtures and fittings. For profitable, self-employed business people, who need to invest in this type of asset, tax savings could be considerable as the relief will impact their higher and additional rate liabilities.

Simplified tax scheme for small unincorporated businesses
A simpler Income Tax scheme for small unincorporated businesses will be introduced for the tax year 2013-14 to allow:

  • Eligible self-employed individuals and partnerships to calculate their profits on the basis of the cash that passes through their business. In essence, they will not have to distinguish between revenue and capital expenditure.
  • All unincorporated businesses will be able to choose to deduct certain expenses on a flat rate basis.

Small Business Rate Relief
The present Small Business Rate Relief Scheme is to be extended for a further year to April 2014.

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