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An update of recent and upcoming changes to company tax.

What's new?

Corporation Tax rates

The planned reduction in Corporation Tax rates from 19% to 17% on 1 April 2020 was reversed by the government. The rate remains at 19% until further notice.


Accounting for companies

Companies House

The normal Companies House filing deadline for private limited company accounts is nine months from the year-end date.

Due to the Coronavirus pandemic, a three-month filing extension was announced in respect of accounts from 25 March 2020. This now applies automatically until April 2021.

See COVID-19: Companies House filings


Changes to lease accounting

A new lease accounting standard (IFRS16) became mandatory for users of International Financial Reporting Standards (IFRS) for periods beginning on or after 1 January 2019 which removes the distinction between finance and operating leases.

An amendment is included in Finance Act 2020 which is treated as always having had an effect:

See Leases: Plant and machinery and Changes to lease accounting


Company Losses

Company losses can generally be offset against profits of the same trade or claimed against other profits or group relieved.

Corporate capital losses

From April 2020:

See Losses: Trading and other losses

Case round-up


Non-resident companies 

Prior to 2019 non-resident companies owning UK rental property were under the Income Tax regime and the non-resident landlords' scheme in respect of their rental profits and the Capital Gains Tax (CGT) regime when their properties were sold.

From 1 April 2019

From April 2020

Finance Act 2019 provides that:

See Non-resident CGT: UK residential property


Corporation Tax (CT) payments

Claims for early repayment of CT

See COVID-19: Early Corporation Tax repayment

Quarterly instalment payments of Corporation Tax for larger companies

From 11 March 2020

See Corporation Tax instalment payments


Digital Services Tax (DST)

The DST is a new tax on the UK revenues of large digital businesses which derive significant value from user participation. It is intended to be temporary pending a global solution and will be subject to a formal review in 2025. 

From April 2020 under Finance Act 2020:

See Digital Services Tax.


Personal Service Companies (PSC) & IR35

HMRC define a service company as a company that generates the majority of its income from supplying services rather than goods to clients.

From 6 April 2021, delayed from 6 April 2020

See Off-Payroll Working rules

Case round-up


R&D and intangibles

Intangibles

Since July 2015 there has been no Corporation Tax relief available for amortisation on Goodwill or other customer-related intangibles, regardless of whether they were acquired from a related party or a third party. 

For assets acquired on or after 1 July 2020:

See Goodwill and the intangibles regime

Research and Development (R&D) relief  

R&D Relief is a Corporation Tax relief. There are two schemes for claiming relief, depending on the size of the company or organisation:

R&D relief is given in two different ways, by enhanced deduction or by payable credit.

R&D for SME's

From April 2021 (as delayed from April 2020) it is proposed that:

See R&D: SME tax credit scheme.

Research and Development Expenditure Credit (RDEC)

From 1 April 2020

See R&D RDEC.

Recent Consultations on R&D


Capital allowances

Annual Investment Allowance (AIA)

The Annual Investment Allowance increased to £1 million for two years from 1 January 2019 to 1 January 2021 and the increase has not, to date, been extended.

Structures and Building Allowance (SBA)

From April 2020

From 11 March 2020

Retrospectively, from 29 October 2018:

See Structures & Buildings Allowance


Company vehicles

Where an employer provides an employee or a director with a company car, the employer is providing a taxable employment-related benefit.

Company cars

From 6 April 2020:

See Company Cars.

Company vans

Proposed from 6 April 2021:

See Company Van Benefit Charges.

Case round-up

Capital allowances: Zero-emissions vehicles


Stamp Duty

Stamp duty is payable on the transfer of shares by the purchaser unless exemptions or reliefs apply.

Transfers to a connected company

From 22 July 2020 under Finance Act 2020:

See Budget 2018: Stamp Duty connected companies.


Making Tax Digital (MTD)

VAT-registered businesses with a taxable turnover below £85,000 will be required to follow Making Tax Digital rules for their first return starting on or after April 2022.

See Making Tax Digital (index)

MTD for VAT 

See MTD for VAT


VAT

Option to tax deadline extended

The supply (i.e. sale or letting) of commercial property is generally exempt from VAT unless its owner has made an Option to tax the property. Once opted to tax, any income deriving from the sale or letting of that property becomes standard-rated for VAT.

See COVID-19: Option to tax deadline extended

Construction Industry Scheme (CIS) VAT reverse charge

From 1 March 2021 (delayed in September 2019 to October 2020 due to Brexit then, in June 2020 due to COVID-19).

See Construction Industry Scheme VAT reverse charge: At a glance

Zero-rating of e-publications

Books, newspapers and periodicals are zero-rated for VAT but electronically supplied publications have always been standard rated.

The government has accelerated changes to apply a permanent zero rate of VAT to supplies of certain electronic publications ('e-publications') from 1 May 2020. It was previously scheduled for 1 December 2020. 

See Books and Printed Matter


Tax abuse and insolvency

Following consultation, from December 2020 (previously this was April 2020):


Disguised remuneration and the loan charge

The loan charge applies to disguised remuneration loans outstanding on 5 April 2019 and charges them to Income Tax and employee NIC unless a settlement is reached with HMRC by 30 September 2020.

Following a review of the loan charge in late 2019, Finance Act 2020 provides for several changes to the charge:

See Disguised remuneration loan charge (subscriber guide).

Tax avoidance case round up


Hot topics

Losses: Trading and other losses
When can a company offset its losses? What restrictions are there? How are loss claims made?

Ceasing trading Index: What are your options?
When a company ceases trading it can: voluntarily apply to be struck off the companies register, be wound up by a liquidator under a compulsory or members voluntary liquidation or be left dormant.

Striking off a company: Step-by-step
Small companies may be struck off the register at Companies House without the requirement to involve a liquidator.

Selling the business: Where do I start?
Selling a business can seem daunting. This is a checklist-briefing note for potential sellers. It applies to companies and their shareholders.


New guides

A start-ups index for companies
This 'At a glance' guide is essential reading for anyone thinking about starting up a new company.

Liquidation: Date of disposal for CGT