Budget 2015- Corporate and Business Tax

Corporation tax rates

As announced previously, the main rate of corporation tax, which generally applies to companies  with profits of more than £1.5 million, will to fall to 20% from 1 April 2015.

The main rate and small companies rates will then be the same and will merge.

Capital allowances

In the 2014 Budget that the Annual Investment Allowance (AIA) (the amount that companies can spend on capital equipment and claim a full deduction in that year) was increased to £500,000 from 1 April 2014 (for corporation tax) or 6 April 2014 (for income tax) to 31 December 2015.  After this, it was due to return to £25,000.

The Chancellor announced today that a revised allowance for periods after 31 December 2015 would be announced in the Autumn Statement later this year.  He indicated that it was likely to be higher than £25,000 (in his words, “it will be set at a much more generous rate”).

Tax for unincorporated businesses – Class 2 National Insurance (NI)

Class 2 National Insurance (paid at a weekly flat rate by the self employed) is currently paid via direct debit or bi-annual bills.

The Chancellor announced plans to abolish Class 2 NI in the next parliament, and also to make changes to Class 4 NI (paid on business profits).  There will be a consultation on the detail and timing later this year.

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