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Budget 2011- Corporation tax changes and how it will impact on UK businesses

Budget 2011- Corporation tax changes and how it will impact on UK businesses

Sarah Miles explains that in the budget 2011 the main rate of Corporation Tax, applicable to larger companies, has been reduced by 2% to 26% rather than the planned reduction of 1%.  Further cuts over the next three years will see Corporation Tax reaching 23% by 1 April 2014.  Britain currently has the sixth highest rate of Corporation Tax in Europe.  However by 1 April 2014 when the rate has reached 23% it will have the lowest rate of Corporation Tax in the G7 and will be 16% lower than in America. The aim of these changes is to make trading in the UK via a limited company more attractive. 

Cuts in capital allowances will partly fund these measures, mainly affecting smaller companies.  The changes to the allowances regime will however be delayed for one year.  Furthermore the rate of Corporation Tax for small companies (those with an annual turnover of less than £300k) which was set to increase from 21% to 22% will be cut to 20% from 1 April. Overall the additional reduction in the rate of Corporation Tax and the planned further cuts must be good news for businesses and will hopefully encourage business growth and investment.        

If you would like to talk to one of our business and commercial law experts, please contact business@nockolds.co.uk      

Sarah Miles (profile) Sarah Miles Thursday 24th March 2011
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