UK: Corporation tax
25 March 2014
Posted by: Author: Chartered Accounts Ireland
Author: Chartered Accounts Ireland
It is intended that the rate of R&D payable credit for loss-making SMEs will increase from 11% to 14.5% for qualifying expenditure incurred on or after 1 April 2014. No other changes were made to the UK R&D relief schemes.
A new corporation tax relief for theatrical productions and touring theatrical productions will form part of Finance Bill 2014, increasing the range of creative sector reliefs available in the UK. The Government will consult shortly after Budget 2014 on the design of the relief.
Legislation will also be included in the Bill amending the video games legislation to make it compliant with State aid approval, and to clarify that only those games on which relief is claimed are to be treated as separate trades. These changes will have effect once State aid approval has been received.
A similar provision will be enacted for the television tax relief legislation at Part 15A of Corporation Act 2009 to clarify that only those television programmes on which relief is claimed are to be treated as separate trades. These changes will have effect from Royal Assent to Finance Bill 2014.
Finance Bill 2014 will amend rewritten legislation to prevent claims for capital gains roll-over relief on the reinvestment in an intangible fixed asset. This will bring the corporation tax treatment of companies seeking to claim capital gains roll-over relief into line with the legislation previously enacted in Finance Act 2002. For any such claims made before 19 March 2014 the tax cost of the replacement intangible fixed asset is to be adjusted when calculating future debits and credits.
Further changes will be introduced to the anti-loss buying rules in Part 14A of Corporation Tax Act 2010. These will exclude Research and Development Allowances under Part 6 of Capital Allowances Act 2001 from the rules and will have effect for "qualifying changes” of ownership occurring on or after 1 April 2014.
As announced in Autumn Statement 2013, the scope of the substantial shareholding exemption will be extended to treat a company as having held a substantial shareholding in a subsidiary being disposed of for the 12 month period before the disposal, where that subsidiary is using assets for oil and gas exploration and appraisal activity that have been transferred from other group companies, and where the other conditions for the exemption are met. These changes will have effect for disposals that occur on or after 1 April 2014.
Finance Bill 2014 will also create an exemption from corporation tax on chargeable gains on assets disposed of in the course of oil and gas exploration and appraisal activities where the proceeds are then reinvested in the UK and UK Continental Shelf. Following consultation, the legislation will also allow proceeds to be invested in oil assets used in a ring fence trade. This legislation will have effect for disposals that occur on or after 1 April 2014.
The scope of qualifying expenditure on mineral exploration and access will be expanded to include expenditure on seeking planning permission where that planning permission is granted. These changes will apply to the qualifying expenditure a company incurs on or after Royal Assent to Finance Bill 2014.
This article first appeared on charteredaccountants.ie.