09 Jul Summer Budget 2015 – Corporation Tax
The main Corporation Tax rate dropped to 20% from 1 April 2015. The reduction to 20% resulted in the unification of the main CT rate and the small profits rate from April 2015.
Most observers would have expected there to be no further changes to the rate as the previous coalition government had cut the main rate of Corporation Tax from 28% to 20% over the last Parliament.
However, the Chancellor was clear that whilst the 20% rate is currently the joint lowest rate of Corporation Tax in the G20 he wanted to go futher. With effect from 1 April 2017 the main rate of Corporation Tax is to be reduced to 19% with a further reduction to 18% from 1 April 2020.
This measure is designed to drive further investment in the UK and the Chancellor was clear that he was ‘sending out loud and clear the message around the world: Britain is open for business.’ The announcement also provides businesses with certainty for the remainder of the current Parliament.
There are special rules for companies with profits from oil extraction and oil rights in the UK and the UK Continental Shelf (‘ring fence profits’). Where a company has ring fence profits and other profits, these should be split out and taxed as appropriate.