Current UK tax legislation states that the UK corporation tax rate will reduce to 17% on 1 April 2020. However, there have been various election sound bites about the corporation tax rate such as postponing the reduction scheduled for 1 April 2020 and increasing the rate to 26%. It is unclear whether these sound bites will make it into the party manifestos.
Since it is uncertain that any one party will win a majority at the election, it is difficult to predict what will happen in April 2020 on corporation tax rates, if anything.
What does this mean for your project?
Unless new legislation is introduced before April 2020, the rate will reduce to 17% automatically in line with existing legislation.
So until the election is held and the position becomes clearer, Operis advises its clients to run sensitivities on a rise in corporation tax rates to see the effect on affordability should a majority government occur. However, there is no new rate that passes the “reasonably foreseeable” test, so if we see a model with a corporation tax rate of anything other than 17% from 1 April 2020, we would highlight that to our clients.
Operis always take into account any Budget announcements which have been released in a Finance Bill and advises clients on how these may affect their projects and we will update our advice once the position becomes clearer after the election.
If you have any questions about Corporate Tax and would like to speak to me or a member of the Operis Accounting and Tax team about how it might affect you, please get in touch.