In his first Budget since the UK lockdowns, the Chancellor set out the government’s three-part plan to ‘do whatever it takes’ to support people and business in crisis, to fix the public finances and to start the work to build the future economy of the UK.
There will be tax incentives to encourage companies to invest over the course of the next two years, but the headline change for many companies will be the increase in the main rate of corporation tax to 25% from April 2023
Corporation tax rate increase
The main rate of corporation tax will increase to 25% from April 2023.
Companies investing in qualifying new plant and machinery from 1 April 2021 to 31 March 2023 will benefit from new first-year capital allowances, which could provide a 130% super-deduction.
Loss carry back
The period over which companies can carry back trading losses will be temporarily increased from one year to three years.
EU Interest and Royalties Directive
The UK legislation that gives effect to the EU Interest and Royalties Directive is to be repealed.
Income tax thresholds and personal allowance
The income tax thresholds and the personal allowance will increase in 2021/22 and will then be frozen until 2025/26.
Enterprise Management Incentive Scheme
The government has released a call for evidence in relation to the Enterprise Management Incentive scheme. The scheme offers the opportunity for employers to award share options to employees such that they can participate in the company’s growth in a tax efficient manner.
Reduced rate of VAT for tourism and hospitality
The temporary reduced rate of VAT for hospitality, holiday accommodation, and attractions is extended.
Extension to the SDLT temporary rates
The temporary increase to the Stamp Duty Land Tax nil rate band for residential property in England and Northern Ireland is to be extended.