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companies within a group. Also from 1 April 2017, companies

will only be able to use losses carried forward against up to

50% of their profits above £5 million. For groups, the £5 million

allowance will apply to the group.

The proportion of a banking company’s annual taxable profit

that can be offset by pre-April 2015 carried-forward losses will

reduce from 50% to 25% from 1 April 2016.

Capital allowances on cars

The 100% first year allowance (FYA) for businesses purchasing

low emission cars will be extended for a further three years

to April 2021. From April 2018 only cars with CO

2

emissions of

50g/km will qualify for FYA (currently 75g/km). From the same

date, the CO

2

emission threshold for the main rate of capital

allowances for cars will be reduced from 130g/km to 110g/km.

Research and Development (R&D) tax credits

Legislation for the small and medium enterprises (SME) R&D tax

credit scheme will be amended to ensure it continues to work as

intended after the previous large company scheme ends on

31 March 2016.

Museums and galleries tax relief

A new corporation tax relief for museums and galleries will

be available for temporary and touring exhibition costs from

1 April 2017.

Capital allowances and leasing

As previously announced, legislation to counter two types of

avoidance involving capital allowances and leasing will be effective

from 25 November 2015. The measure prevents companies from

artificially lowering the disposal value of plant and machinery,

and taxes as income any payment received for agreeing to

take responsibility for tax-deductible lease-related

payments.

BUDGET

16 MARCH 2016

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