Autumn Budget 2024: A ‘corporate tax roadmap’?

The run up to a Budget always gets accountants and tax professionals talking. However, this Budget has been different. This Budget seems to have had most of the country talking about what changes the Chancellor may have in store for us, with the majority fearing the worst.

Whilst the announcements will undeniably cause some pain, especially for businesses who will see their employment costs increase substantially, the reality is that at certain points during the build-up, the expected tax increases were forecast to be much larger than have materialised.

Corporate Tax Roadmap

From a corporate tax perspective, the Chancellor has published the rather grand sounding “Corporate Tax Roadmap.” In reality this is a 26-page document that essentially confirms nothing is changing. The headline rate of corporation tax will remain at 25%, and capital expenditure will continue to attract relief through both Full Expensing and the £1 million Annual Investment Allowance (AIA).

Research and Development (R&D) tax relief

Creative tax reliefs such as Research and Development (R&D) tax relief and Patent Box will also continue unchanged.

The Chancellor has announced that the Government is looking at various aspects of how corporation tax is administered, meaning it is looking at tightening up certain areas and reducing non-compliance. In particular, two areas seem to be of real concern to the Government – R&D tax relief claims, and international transactions. 

The Government’s latest statistics suggest that 17.6% of R&D claims submitted in 2021/22 contained some form of fraud or error. It is expected this rate will have reduced following HMRC’s recent increased scrutiny of claims, and this has encouraged the Government to commit further resource to R&D enquiries. We expect HMRC to continue to be active in enquiring into R&D claims.

Transfer Pricing Exemption

From an international perspective, consultations will be held as to whether the transfer pricing exemption for medium-sized businesses should be removed, and whether all transactions with related parties based outside the UK should be reported to HMRC. Their objective seems clear, the Government wants to ensure the correct amount of tax is collected within the UK, rather than being diverted to an overseas jurisdiction.

Overview

Overall, this was an unusually quiet Budget for corporate tax, however, given the changes that have been introduced for other taxes, this certainty, and the stability it should provide, should be one positive that companies can take from this Budget.

Budget analysis webinar

On October 31st, we hosted a Budget Analysis webinar, analysing the Chancellor's announcements and the potential consequences for both businesses and individuals.

Watch the Budget Analysis webinar recording