Business Tax Corporation Tax. The main Corporation Tax rate for Financial Year 2014 will be reduced by a further 1% to 21%. Bank levy will increase to prevent banks benefiting from the reduction. The main CT rate for Financial Year 2013 is 23% and the Small Profit rate is 20%. Capital Allowances. The Annual Investment Allowance will be increased from £25,000 to £250,000 per annum for a 2 year period commencing from 1 January 2013. Tax accounting. A simpler income tax scheme for small unincorporated businesses will be introduced for the tax year 2013-14 to allow:
- Eligible self employed individuals and partnerships to calculate their profits on the basis of the cash that passes through their business. They will generally not have to distinguish between revenue and capital expenditure
- All unincorporated businesses will be able choose to deduct certain expenses on a flat rate basis.
- Foreign bank levies – which are not allowable deductions for Income Tax or Corporation Tax purposes.
- Tax mismatch scheme – which reduce Corporation Tax liability through asymmetric tax treatment of loans or derivatives.
- Property return swaps – which convert capital losses into income losses.
- Manufactured payments – where schemes involve stock lending arrangements.
- Payments of patent royalties – relief for non trade payments to be abolished.