Corporate tax roadmap revealed

The Autumn 2024 Budget was unsurprising from a corporation tax perspective. This is in line with the Government’s aspiration to provide more certainty and predictability to allow UK businesses to make long-term decisions with confidence that the corporate tax landscape will remain stable.

What is the corporate tax roadmap?

Alongside the Budget, the Government published a corporate tax roadmap, which confirmed its commitment to:

• Capping the corporation tax rate at 25% to the end of this parliament
• Maintaining the small profits rate and marginal relief at current rates for businesses with profits below £250,000
• Maintaining the current capital expenditure reliefs, including full expensing and the £1m annual investment allowance, writing down allowances and structures and building allowances
• Maintaining the current research and development (R&D) and patent box schemes
• Maintaining the current intangible fixed asset scheme
• Maintaining its commitment to pillar one and pillar two rules for the largest businesses (worldwide turnover over 750m euros)

Perhaps the biggest and most impactful change announced is the plan to increase the interest rate on unpaid tax liabilities. However, the Government has not been specific on the rate or whether this will apply to late quarterly instalment payments.

We can anticipate change in the areas where the Government has announced plans to launch consultations. This includes:

• Land remediation relief rules
• Advance clearances for R&D reliefs
• The definition of a UK permanent establishment
• UK-UK transfer pricing rules and diverted profits tax

Given the number of recent changes to the UK R&D scheme, widening the availability of advanced clearance for relief would be a welcome step to provide UK businesses with more certainty and confidence to invest in UK R&D activities. This is something that the Government will consult on in spring 2025.

In addition, the Government has committed to closing the tax gap and increased funding for HM Revenue & Customs, including funding for an additional 5,000 compliance staff, which will undoubtedly lead to increased enquiry activity. With the Government identifying corporation tax due by small and medium-sized businesses as the biggest contributor to the tax gap, it is more important than ever to ensure your business has robust tax risk governance and controls.

Overall, this Budget sets out very little change for corporation tax and provides UK businesses with certainty and confidence that there will be continue to be little change for the remainder of the parliament.

For more analysis, visit our Budget hub.