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Taxand UK analyses the UK Budget 2016.
The Government’s Business tax road map sets the scene for the rest of this parliament. A corporate tax rate cut to 17% by 2020 is balanced by a significant extension of the anti-hybrid rules, by the introduction of interest restrictions following Base Erosion and Profit Shifting (BEPS) Action 4, and by restricting loss reliefs to 50% of profits for larger groups, all be it the off set will be more flexible. For banks the loss relief will be restricted to 25% of profits.
A new rate of 5% stamp duty land tax on commercial property is accompanied by a significant increase in lease duty where the Net Present Value (NPV) of rents is over £5 million.
A major reform of business rates will take many smaller businesses out of the tax entirely. Larger businesses will benefit from an improved compliance regime and more regular revaluations, but the overall level of tax raised from such businesses is not likely to decrease substantially.
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This was a Budget designed to appeal to smaller businesses and middle class voters. Multi-national and other large businesses remain the target for antiavoidance and other measures which are expected to bring substantial additional revenues into the Treasury.