The most important new tax changes for businesses during 2015

From corporation tax to National Insurance, tax is a consideration all business owners and leaders must be firmly on top of.

Some move in a favourable direction for businesses, while others in one less so. To help you stay on top of the most important changes, we’ve documented nine alterations.

Corporation tax falls to 20 per cent

As one of the hallmarks of the coalition government, corporation tax has been in steady decline since 2013. Back then it stood at 28 per cent, before a drastic haircut took it to 24 per cent in April of that year. In 2014 another three per cent was taken off and now, as of 1 April 2015, it sits at 20 per cent – the lowest in the G7 and below that of Luxembourg.

Speaking back in 2013 when he kickstarted his corporation tax cut change, chancellor George Osborne said: “I want to send a message to anyone that wants to set up business here, or create jobs here, that Britain is open for business.”

The development has been widely popular, and means it sits well below that of European counterparts Germany (29 per cent) and France (33 per cent). However, with Irish corporation tax only 12.5 per cent, there will still be calls to keep it falling.

Labour has already indicated in its new manifesto that the rate would be going back up to 30 per cent for larger businesses, but remain at 20 per cent for smaller ones.

High street small businesses get £1,500 boost

Announced as part of Osborne’s last Autumn Statement before the general election, in December, this initiative added £500 to the business rate discount for retail, food and drinks businesses on the high street.

Some 30,000 eligible businesses located in properties with a rateable value below £50,000 were already taking advantage of the discount.

Local authorities will now apply the discount to business rates bills, with full reimbursements for this relief then available through state aid grants. It will be available for one year.


Diverted profits tax introduction

Aimed firmly at global technology businesses such as Google and Facebook, which are making big money in the UK but shifting profits overseas, this policy was unexpected when revealed at the end of 2014.

Osborne stated then that: “The UK will become the first to make sure that big multinationals pay their share of tax”. The so-called “Google tax” will be a 25 per cent tax on UK profits that were previously being artificially shifted out of Britain.

In October 2014 it was revealed that US social media giant Facebook had paid no UK corporation tax for a second successive year, after reporting a pre-tax loss of £11.6m in Britain.

HMRC has said the main objective of the diverted profits tax is to “counteract contrived arrangements” used by large groups (typically multinational enterprises) that result in the “erosion of the UK tax base”.

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SME R&D tax credits rise to 230 per cent

In an effort to provide further stimulation to innovation and improvements to technology, R&D tax credits have received a further boost and hare now worth 230 per cent.

Boiled down, that means for each £100 of qualifying costs, a company could have the income on which corporation tax is paid reduced by an additional £130 on top of the £100 spent. Also now in force is an improvement on the above the line credit for large companies from 10 per cent to 11 per cent.

R&D tax credits now do not have a limit on qualifying expenditure.

Away from producing an entirely new product, R&D also includes developing a process or product that already exists in the industry, but where the information to resolve the technological uncertainty is not readily available to them; and making an improvement to an existing product or process, or duplicating an existing product in an appreciably improved way. 

Read on to find out about changes to national insurance, expatriate employees and PAYE.

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