Businesses need to be aware of the latest changes to taxes that were revealed in the government’s recent Autumn Budget.
Chancellor Rishi Sunak announced alterations to corporation tax, including reducing the banking surcharge to three per cent from April 1st 2023.
It will also increase the surcharge allowance from £25 million to £100 million, which will be outlined in the Finance Bill 2021-22.
Eloise Walker from law firm Pinsent Masons said this move was “uninspiring”, as it is a “good money-spinner for the government”.
She stated: “Banks will in fact see a rate increase as the drop from eight per cent to three per cent is being offset by the increase in corporation tax rates to 25 per cent to give an overall one per cent rise to 28 per cent.”
However, she noted smaller banks will be pleased with the announcement as it could encourage new entrants.
Additionally, the temporary increase of the annual investment allowance (AIA) from £200,000 to £1 million has been extended. Instead of finishing on December 31st 2021, as was planned, it will continue until March 2023, allowing companies to receive relief of 100 per cent when investing in qualifying capital expenditure on plant and machinery.
Earlier this year, HM Treasury revealed its plans for the super-deduction capital allowance of 130 per cent on new qualifying plant and machinery assets. It hopes this will enable businesses to reduce their tax bill by up to 25p per £1 they invest.
There will also be a 50 per cent first-year allowance for qualifying special rate assets on integral features in a building.
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