Focus on: corporate tax roadmap

1. The headline rate of corporation tax remains at 25% but there will be ongoing monitoring of international developments to ensure that the UK’s regime remains competitive to attract investment and growth.
2. The small profits rate and marginal relief will remain at their current rates and thresholds

1. The permanent full expensing allowance, the £1 million annual investment allowance, writing down allowances of 18% and the structures and building allowances were all retained.
2. There will be some changes on the definitions and clarity as to the qualifications for capital allowances with an aim to simply the legislation and the tax treatment for predevelopment costs.
3. There will be further exploration of an extension of full expensing to assets that are bought for leasing or hiring.

The existing rates for the merged R&D expenditure credit scheme and the enhanced support for R&D Intensive SMEs will be maintained. HMRC will proceed with establishing the R&D expert advisory panel and continuing to improve signposting and guidance on the reliefs. 

An R&D disclosure facility will be launched by the end of the year and use its powers to tackle agents who breach agent standards. The government has also committed to discussing widening the use of advance clearances in R&D reliefs with the intention to consult on lead options in Spring 2025.

The government will consult on reforms to the UK's rules on transfer pricing, permanent establishments, and diverted profits tax in spring 2025. The government will consult on further changes to the transfer pricing rules including considering lowering the thresholds for medium-sized businesses and a requirement to report cross-border related party transactions to HMRC. The government will review the transfer pricing treatment of cost contribution arrangements.

The patent box will be maintained and the aim is to preserve the UK’s competitive regime for intangible fixed assets.

1. The audio-visual expenditure credit and video game expenditure credit will be retained.
2. There is to be a review of the effectiveness of land remediation relief.

1. Developing and consulting on new processes to give investors in major projects greater advance certainty.
2. Publishing an update in spring 2025 on modernising the technology the corporation tax system utilises.

The UK corporate tax regime is still relatively stable subject only to immediate limited reform and longer-term consultation. The current rate of corporation tax remains the lowest in the G7, which alongside various reliefs that are beneficial to both standalone and group companies, ensures the UK maintains its competitive edge in supplementing and encouraging business investment and its attractiveness for international headquarters and holding companies. 

International companies can view the UK as an attractive location to locate headquarters and/or holding companies due to:

1. Broad exemptions for gains on disposals of substantial shareholdings.
2. Broad exemption for dividends paid to UK companies.
3. Limited withholding taxed on outbound payments.
4. Double taxation agreements/treaties limiting the foreign withholding of taxes on income received by UK resident companies and preventing double-taxation arising out of cross-border activities.