Business Taxes

Corporation Tax
Corporation tax rates for all sizes of company in the UK (excluding the oil and gas sectors which pay at special rates) are aligned at 20% from 1 April 2015. This removes the need for the associated companies rule that restricts the use of the small profits rate of corporation tax, so those rules are abolished from April 2015.

However, large companies must pay their corporation tax by quarterly installments once their taxable profits exceed £10 million, and the tax due is at least £10,000. From 1 April 2015 those thresholds are divided by the number of companies in the corporate group which are related by a 51% holding. 

The Chancellor has proposed the Northern Ireland Executive could take control of corporation tax rates, and directly collect corporation tax from companies based in that region. There is no indication of when this change may occur.

Creative Sector
In 2013 and 2014 the Government introduced various new tax reliefs for companies that produce high-end TV programmes, video games or theatre productions. These reliefs are all similar but not exactly the same.

A new tax relief along the same lines for companies that produce children's TV programmes will be introduced from April 2015. It will also consult on introducing a new tax relief for orchestras from April 2016.

Research and Development

Small Companies 
Companies have been able to claim enhanced tax relief for expenditure on research and development (R&D) for many years. The amount spent on specific classes of costs relating to qualifying R&D projects is multiplied by a percentage, before the total is deducted from the company's taxable income for the year. Since 1 April 2012 that percentage has been 225%.

For R&D expenditure incurred from 1 April 2015 that percentage is increased to 230%. However, the costs that qualify for this deduction will be further defined to remove materials which are used in products that are sold.

Large Companies
Large companies claim R&D tax relief as an expenditure credit equal to a percentage of the R&D spend for the accounting period. That credit (known as "above the line" credit) is generally set against the company's corporation tax liability for the year. The percentage of R&D costs translated into the "above the line" credit was 10% for periods since 1 April 2012, and will be increased to 11% from 1 April 2015.

Research and Development Claims

Did you know there is a tax relief for companies which invent stuff? The process of inventing and solving the associated problems is called research and development (R&D). Companies can more than double the tax deduction given for the costs of R&D.

The new 'stuff' could be a product, a material or a process which has been changed or improved. For example if you find a way of speeding up a production line, or changing the process to cope with a new type of material, the work to achieve that aim is R&D which should qualify for the tax relief.

Many innovative ideas don't actually work. That doesn't matter. The costs expended when working on your new idea are tax allowable as R&D, if you can show you were pushing the boundaries of knowledge or capability in the fields of science or technology.
Working on some types of computer programming can count as R&D, particularly where you are making previously unrelated computer systems work together. The key is that no-one else has done what you are trying to, or if they have achieved it, they have kept their discovery to themselves.

Talk to us about your innovative work. Even small costs are worth claiming as there is now no minimum claim for each year.