Corporation tax rates
The budget reduces the main rate of corporation tax in the United Kingdom to 24% (from 26%) as of April 1, 2012. The rate is expected to further decrease to 23% as of April 1, 2013 and to 22% as of April 1, 2014. The small companies' rate will remain at 20%.
The budget proposes to allow companies to elect to apply a 10% corporation tax rate to a proportion of profits attributable to patent and certain other qualifying intellectual property from April 1, 2013. In the first year, this proportion will be 60% and will increase annually up to 100% by April 2017.
An "above the line" R&D refundable tax credit will be introduced from April 2013 with a minimum rate of 9.1% before tax. The U.K. government will consult on the detailed design of the credit soon and decide final rates.
Other tax changes
The budget also:
- Reduces the top personal rate of income tax to 45% (from 50%) as of April 2013
- Pledges consultations on a General Anti-Avoidance Rule targeted at artificial and abusive tax avoidance schemes with a view to bringing forward legislation in 2013
- Raises the stamp-duty rate on residential properties worth more than £2 million purchased by "non-natural" persons (i.e., companies and potentially partnerships) to 15% and sets stamp duty on individual-owned properties worth more than £2 million at 7%, effective March 22, 2012
- Pledges consultations on introducing an annual charge on residential properties valued at over £2 million owned by non-natural persons to begin in April 2013
- Plans to extend the capital gains tax regime to gains on the disposal of U.K. residential property by non-resident, non-natural persons, such as companies from April 2013, following consultation on this measure.
For more information, contact your KPMG adviser.