Corporate Tax Roadmap 

The measure

Alongside the Budget, the government published a Corporate Tax Roadmap setting out its approach to corporation tax for the course of the parliament. The roadmap reflects consultation input from businesses, which have been clear that a stable and predictable tax environment helps to provide the confidence needed to encourage investment, innovation and growth over the long term. The roadmap sets out the features of the tax system that will be maintained, and highlights areas where the government expects to consider changes to ensure the tax system remains dynamic and up to date. 

Corporation tax rate: 

• the headline rate of corporation tax will be capped at 25% for the duration of the parliament;
• the government will monitor international developments to ensure that the UK’s regime remains competitive; and
• the small profits rate and marginal relief will also be maintained at their current rates and thresholds. 

Capital allowances: 

• full expensing (100% first-year allowance for companies on qualifying new main rate plant and machinery, and the 50% first-year allowance for companies on qualifying new special rate plant and machinery) will be maintained;
• other core features of the UK’s capital allowances regime including the £1 million Annual Investment Allowance, writing down allowances, and the Structures and Buildings Allowance will be maintained;
• the government will consult on how to provide greater clarity on what qualifies for different capital allowances, the simplification of capital allowances legislation, the tax treatment of pre-development costs, and the effectiveness of land remediation relief; and
• the government recognises the case for extending full expensing to assets bought for leasing and will explore making this change when fiscal conditions allow. 

Innovation and creative sector reliefs: 

• R&D reliefs will be maintained, including the rates for both the merged R&D Expenditure Credit scheme and the Enhanced Support for R&D Intensive small and medium sized enterprises;
• the administration of R&D reliefs will be enhanced by establishing the R&D expert advisory panel, continuing to improve signposting and guidance on R&D reliefs, and launching an R&D disclosure facility by the end of 2024;
• the government will consult on widening the use of advance clearances in R&D reliefs;
• the patent box and the UK’s regime for intangible fixed assets will be maintained; and
• an audio-visual expenditure credit and a video game expenditure credit will be maintained. 

International tax: 

• second-round consultation will be launched on reforms to the UK’s rules on transfer pricing, permanent establishments, and diverted profits tax – including the potential removal of UK-to-UK transfer pricing;
• the government will also consult on potentially lowering the thresholds for exemption from transfer pricing for medium sized companies and introducing a requirement for multinationals to report cross-border related party transactions to HMRC;
• the transfer pricing treatment of cost contribution arrangements will be reviewed;
• the government will continue to support international agreement on a multilateral solution under Pillar One and maintains the commitment to repeal the UK’s digital services tax when that solution is in place; and
• the government will continue to ensure that the UK rules reflect internationally agreed updates to the global minimum tax rules under Pillar Two and will consider opportunities for simplification or rationalisation of the UK’s rules for taxing cross border activities in light of Pillar Two. 

Tax administration: 

• The government will consult on a new process to give investors in major projects increased advance certainty; and
• further details on HMRC’s modernisation ambitions will be set out in the spring. 

The document also confirms HMRC’s commitment to co-operative compliance and the customer compliance manager model as the most efficient route to manage the tax compliance of the UK’s largest and most complex businesses. 

Who will be affected?

Companies within the charge to corporation tax. 

When will the measure come into effect?

The consultation on the tax treatment of pre-development costs will take place in early 2025 and other consultations will be launched in Spring 2025.