Finance Bill 2012
Finance Bill 2013
It has been announced that the main rate of corporation tax will now fall by 2 percent on 1 April 2012, to 24 percent. The Finance Bill 2011 had previously included a provision for a 1 percent reduction to 25 percent. This 2 percent reduction will be included in Finance Bill 2012 along with the next planned annual reduction of 1 percent to 23 percent on 1 April 2013. A further 1 percent reduction to 22 percent at 1April 2014 will be legislated in Finance Bill 2013.
The small profits rate of tax will remain at 20 percent for the financial year commencing 1April 2012.
Corporation tax rates for ring fence profits (those arising from oil extraction and oil rights in the UK and the UK continental shelf) will remain at 30 percent and 19 percent respectively.
This further reduction in the main companies rate will be welcomed by companies with larger profits, although it will have no impact on smaller businesses with profits below £300,000.
Companies will need to consider the tax accounting implications of the rate changes.
- The incremental rate reduction from 25 percent to 24 percent from 1 April 2012 will be substantively enacted before 31 March 2012 on the basis that, as set out in the Budget resolutions, this rate change is given statutory effect under the Provisional Collection of Taxes Act 1968 before 31 March 2012. This is consistent with the incremental rate reduction from 27 percent to 26 percent that was announced in the 2011 Budget.
- The proposed rate reduction from 24 percent to 23 percent to apply from 1 April 2013 will NOT be substantively enacted for IFRS and UK GAAP purposes until Finance Act 2012 passes through the House of Commons.
- For US GAAP purposes the incremental rate reduction from 25 percent to 24 percent and the proposed rate reduction from 24 percent to 23 percent will NOT be enacted until Finance Act 2012 receives Royal Assent.