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Business Tax and Investment Incentives – Budget Report 20 March 2014

Business Tax and Investment Incentives

Corporation Tax

Corporation tax rates and bands are as follows:

Financial Year to 31 March 2015 31 March 2014
Taxable profits
First £300,000 20% 20%
Next £1,200,000 21.25% 23.75%
Over £1,500,000 21% 23%

From 1 April 2015 the main rate of corporation tax will be reduced and unified with the small profits rate, giving a new unified rate of 20%.

Annual Investment Allowance (AIA)

The maximum amount of the AIA has been increased from £250,000 to £500,000 for all qualifying expenditure on plant and machinery made from 1 April 2014 for corporation tax and 6 April 2014 for income tax.  After 31 December 2015 the limit will be reduced to £25,000. Transitional rules will apply.

Enhanced capital allowance (ECA)

The period in which businesses investing in new plant and machinery in ECA sites in Enterprise Zones can qualify for 100% capital allowances has been extended by three years to 31 March 2020.

Theatre tax relief

A new corporation tax relief for theatrical productions and touring theatrical productions is to be introduced. The Government will consult shortly after the Budget on the design of the relief.

Research and development (R&D)

From 1 April 2014 the rate of R&D payable tax credit for loss making SMEs will be increased from 11% to 14.5%.

Seed Enterprise Investment Scheme (SEIS)

The SEIS and the associated capital gains tax (CGT) relief for re-investing chargeable gains in SEIS shares are to be made permanent.

Venture Capital Trusts (VCTs)

The Government will introduce a measure to prevent VCTs from returning share capital to investors within three years of the end of the accounting period in which the VCT issued the shares. This will have effect in respect of shares issued on or after 6 April 2014.  Distributions made from realised profits will not be affected by this change.

Social investment tax relief

Legislation will be introduced to provide a range of income and CGT reliefs, to provide incentives for investment by individuals in qualifying social enterprises. Income tax relief will be available at 30% of the amount invested. These changes will have effect from 6 April 2014.
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