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United Kingdom: Budget for 2015/2016 – Business taxation

On 18 March 2015, the Chancellor of the Exchequer presented the Budget for 2015-16 to the Parliament. Details of the Budget relating to business taxation are summarised below.

Corporation Tax Rate
The Corporation Tax Rate is reduced to 20% from 2015 to 2016.

Diverted Profits Tax
Legislation will be introduced in the Finance Bill 2015 for this tax to come into effect for 2015/16. Following consultation, the legislation is revised to narrow the notification requirement. There are also changes to clarify:

  • The rules for giving credit for tax paid
  • The operation of the conditions under which a charge can arise
  • Specific exclusions
  • The application of the tax to companies subject to the oil and gas regime

Contrived Loss Arrangements
New legislation will be introduced in the Finance Bill 2015, namely, a new Part 14B of the Corporation Tax Act (CTA) 2010, to prevent such arrangements. The measure covers:

  • Carried forward corporation tax trading losses
  • Non-trading loan relationship deficits
  • Management expenses

Supplementary Charge
The supplementary charge is reduced from 30% to 20%, with retroactive effect as from 1 January 2015.

New Investment Allowance
Legislation will be introduced in the Finance Bill 2015 to amend CTA 2010 to introduce a new investment allowance. The allowance will remove an amount equal to 62.5% of investment expenditure incurred by a company in relation to a field from its ring fence profits, which are subject to the supplementary charge.

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