The main provisions relating to our clients are:
Rate of Corporation Tax
The distinction between small companies and large companies has now ceased, as has the resulting complex marginal calculation. All companies now pay Corporation Tax at the same rate. Over the next few years the rate is anticipated to be as follows:
- 2016/17 (year to 31st March 2017)……20%
- 2017/18………………………………………………19%
- 2018/19………………………………………………19%
- 2019/20………………………………………………19%
- 2020/21………………………………………………17%
Loans to participators
A participator is someone who has a share or interest in the capital or income of a company, ie basically a shareholder. If a close company makes a loan to a participator, or an associate of a participator, then the company is charged Corporation Tax on the amount of the loan. The rate of tax charged on loans made after 6th April 2016 is 32.5%, an increase from 25% on loans made before this date.
IR35
From April 2017 the responsibility for deciding whether a contract between a personal service company and a public sector body moves from the company to the public sector body who must deduct PAYE and NIC from any payments so caught. The responsibility remains with the contractor as at present in respect of non-public sector engagements.
Non-Monetary Trading Income
The Finance Act will confirm that any property or trading income received in a non-monetary form after 16th March 2016 will be subject to Corporation Tax or Income Tax.
Losses
Currently, losses brought forward from earlier periods can only be offset against profits earned from the same income stream. Losses incurred after 1st April 2017 and carried forward can be offset against future total profits. However, if profits exceed £5m then brought forward losses can only be used to offset 50% of those profits.
Other Measures
- Acceleration of Corporation Tax payments for companies with profits over £20m
- Restriction of deduction for interest payments after 1st April 217 to 30% of taxable profits
- Non-resident companies will always be subject to UK Corporation Tax on profits from developing UK land
- Changes to Enterprise Management Incentives, Venture Capital Schemes and Enterprise Zones