Arguably the most significant of the Chancellor’s announcements was the increase in the corporation tax rate to 25 per cent from 1 April 2023. With this increase in the headline rate comes the introduction of a small companies rate for those with profits of less than £50,000, which will remain at the current level of 19 per cent. This lower rate band could be a valuable tax break for start-up businesses and those recovering from adverse trading conditions arising from the coronavirus pandemic.
The Chancellor continued to mention the need for innovation and growth, so that the country can maintain its international competitiveness. Consultations in relation to both research and development (R&D) tax relief and the tax-advantaged enterprise management incentive (EMI) employee share option scheme, both of which were previously restricted under the EU State Aid rules, suggest that the Government is exploring changes it may have been unable to make whilst the UK was an EU member state. It will be interesting to see how widely the R&D review goes, in particular – could the whole scheme be open to redesign?
There were also announcements made in relation to immigration reforms, which may help bring further talent to the UK for our media and tech firms – the Government will hope this helps UK businesses to thrive without blocking home-grown talent from coming through. An increase to apprenticeship incentive grants, to £3,000 per new apprenticeship hire , which can be topped up to £4,000 for certain new hires, may assist towards this goal.
A ‘super-deduction’ for qualifying capital expenditure could help media and tech companies to build their infrastructure, supporting the future growth of their businesses. This relief comes into effect from 1 April 2021 and runs until 31 March 2023, allowing companies sufficient time to get their budgets in place and plan their capital spending.
The ability to carry back trading losses over a three year period, rather than the current one year period, could provide a cashflow boost to assist businesses’ recovery and onward growth after the pandemic.
Specifically for film and TV production businesses, the film and TV production restart scheme has been extended for another six months and will continue to 31 December 2021, supporting the sector’s recovery following the pandemic.
The Budget did not contain any announcements regarding new taxes on digital sales, which will come as a welcome relief to many. There was great news for business owners looking into their exit strategies, with no significant changes to capital gains tax announced.
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