In its corporation tax roadmap, the government has confirmed that it will make no changes to the following during the life of this parliament:

• the main and small profits rates of corporation tax, marginal relief and the associated thresholds;
• the territorial scope and structure of the UK corporation tax regime, such as exemptions for substantial shareholding disposals and dividend income;
• the rates of writing down allowances and the availability of the annual investment allowance and the structures and buildings allowance;
• the rates of relief under the merged research and development (R&D) tax relief regime and the enhanced support for R&D-intensive small and medium-sized enterprises (SMEs); 
• the current overall approach to the patent box and taxation of intangible fixed assets; and
• the availability of the audio-visual and the video game expenditure credit.

However, it will consult on, or consider changes in, the following areas:

• a potential extension of full expensing relief to assets that are bought for onward leasing or hiring;
• relief for pre-development costs incurred in renewable energy and major infrastructure projects;
• widening the use of advance clearances for R&D tax relief and for investors in major projects;
• land remediation relief (including its effectiveness);
• reforms to the UK’s rules on transfer pricing, permanent establishments and diverted profits tax;
• opportunities for simplification or rationalisation of the rules for cross-border activities following the introduction of the pillar two rules, and removal of the digital services tax once the pillar one global solution is in place; and
• modernisation of the administration of the corporation tax system (potentially involving further digitalisation), with further details to be provided in the spring.

Finally, the government has indicated that it will keep the following under review:

• the bank levy and bank corporation tax surcharge;
• the scope of what types of expenditure qualify for capital allowances; and
• levels of error and fraud in the R&D tax relief space, which HMRC will tackle through the introduction of the R&D expert advisory panel and the R&D disclosure facility. The government published a document setting out the shape and scale of the error and fraud in claims for R&D tax relief alongside the roadmap. 

ICAEW’s view

Responding to the corporate tax roadmap published alongside the Budget, Frank Haskew, Head of Taxation Strategy at ICAEW, said: “We welcome the certainty that the roadmap provides by promising no significant changes to the structure of the corporation tax system and protecting key reliefs and allowances. We also look forward to discussing with the government and HMRC many of the areas open for consultation, such as relief for pre-development expenditure and advance clearance mechanisms for R&D and other investments, which are facilities we have been calling for in our budget representations.

However, we would also have liked the government to look at the business tax landscape as a whole and how the various taxes that businesses pay interact with each other, and so we are disappointed the government has not committed to a more holistic approach. We believe that greater certainty across all taxes would support the government’s growth agenda and reduce costs for business.”  

ICAEW’s Budget webinar

To learn more about the measures discussed above, and other changes announced at the Budget, join members of the Tax Faculty at the Budget webinar on Friday, 1 November 2024. Attending the webinar could contribute up to 1.5 hours of verifiable Continuing Professional Development (CPD), providing you can demonstrate that the content is relevant to your role.