United Kingdom - Finance bill substantively enacted; reduced corporation-tax rate 

Thus, 3 July 2012 is the date of “substantive enactment,” since the legislation next goes to the House of Lords where it cannot be amended.

Reduced rate of corporation tax

• For companies with 30 June 2012 half- and full-year end accounts prepared under UK GAAP and IFRS, current and deferred tax is to be calculated based on the rate of 24% (or blended rate when appropriate) substantively enacted on 26 March 2012. In these accounts the rate reduction to 23% will still be shown as disclosure only.
• For companies with periods ending on or after 3 July 2012, deferred tax is to be calculated based on a rate of 23% to the extent that the related temporary or timing differences are expected to reverse at the lower rate.

Finance Bill 2012 has not yet received Royal Assent but this is likely to occur sometime during July. The rate of 23% (effective from 1 April 2013) will be “enacted” from this date, as will the reduction to 24% (effective from 1 April 2012), which was substantively enacted on 26 March 2012.

Under U.S. GAAP, for companies with 30 June 2012 half- and full-year ends, current and deferred tax will continue to be based on the previously enacted tax rate of 25% (or blended rate where appropriate). The reductions to 24% and 23% will still be shown as disclosure only.

Indirect tax changes

Other changes in the Finance Bill concern indirect tax, including:

• Value added tax (VAT) measures
• A delay in the duty rate increase for the fuel duty (tax) until January 2013
• Provisions allowing Northern Ireland certain flexibility to set new higher rates of air passenger duty (tax)

Read a July 2012 report (PDF 175 KB) prepared by the KPMG member firm in the United Kingdom: Weekly Tax Matters (6 July 2012)