Corporation tax

In general, business leaders have reacted positively to the cut in the mainstream corporation tax rate from 30 per cent to 28 per cent announced during Budget 2007, which becomes effective from 6 April 2008. However, for smaller corporations, the tax rate is set to increase from 20p to 22p by 2009.
There were also concerns that the tax reduction will be paid for through cuts in capital allowances for investment in plant and machinery, which might affect some businesses. The cut in capital allowances from 25 per cent to 20 per cent will take effect from the tax year 2009/10.

The rate reduction follows campaigning by business organisations to reduce the corporation tax rate at a time when other European countries have been reducing theirs. Several high-profile companies have relocated their headquarters abroad in recent years, citing tax as a factor in their decision.

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This article is for your general information and use only and is not intended to address your particular requirements. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without appropriate professional advice after a thorough examination of their particular situation. Budget 2007 is subject to the Finance Bill becoming law. Levels and bases of, and reliefs from, taxation are subject to change.

Article date: 03.07