page 7 BUDGET 15 MARCH 2023 Business Taxes Corporation tax rates Corporation tax is charged at 25% (main rate) and 19% (small profits rate) for financial years 2023 and 2024. The Patent Box deduction formula will be amended to ensure the correct amount of relief is given for claimants that are subject to the small profits rate. Capital allowances Companies incurring qualifying expenditure on the provision of new plant and machinery from 1 April 2023 until 31 March 2026 will be able to claim a 100% first-year allowance for main rate expenditure, or a 50% first-year allowance for special rate expenditure. These temporary allowances may be extended beyond 31 March 2026. The £1 million limit for the annual investment allowance will be made permanent, as previously announced. The first-year allowance for electric vehicle charge points is extended until 31 March 2025 for corporation tax and 5 April 2025 for income tax, also as previously announced. Research and development (R&D) A new credit rate will be available to loss-making companies whose R&D expenditure constitutes at least 40% of their total expenditure. From 1 April 2023, qualifying companies can claim a payable credit rate of 14.5% for qualifying R&D expenditure instead of the 10% rate under the existing R&D small and medium-sized enterprise (SME) scheme. The R&D reliefs will be reformed, as previously announced, generally for accounting periods starting on or after 1 April 2023. There will be two new categories of qualifying expenditure for R&D relief – data licences and cloud computing services. Companies will have to inform HMRC of their intention to make a claim for R&D relief using a new digital form, unless they have claimed R&D reliefs in the previous three years. A digital additional information form will have to accompany claims made on or after 1 August 2023. The previously announced restriction on some overseas expenditure will come into effect from 1 April 2024 instead of 1 April 2023. Film, TV and video games reliefs Refundable expenditure credits will replace the film, TV and video games tax reliefs. An audio-visual expenditure credit will cover the four existing film and TV tax reliefs. The existing specific eligibility criteria of each relief will be preserved. There will also be a video games expenditure credit. l Video games, film and high-end TV will have a rate of 34%. l Animation and children’s TV will have a rate of 39%. The expenditure credits will be calculated directly from qualifying expenditure instead of being an adjustment to the company’s taxable profit as under the existing regime. Companies will be able to claim the credits for accounting periods ending on or after 1 January 2024. The current tax reliefs will close to new productions from 1 April 2025. think ahead Your business might be entitled to a valuable R&D tax credit – even if it doesn’t make a taxable profit. Check out the new position; you might be surprised what expenditure may now qualify and how much it could be worth to you. >
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