PEM News

A budget fit for a high-tech future

Tax specialists Jan Fachot and Matthew Eady comment on today's Budget announcement.

The autumn budget promises continued investment in business and the economy to ensure that the country is ready for a post Brexit world.  The Chancellor sees technology and knowledge intensive businesses as key to this, setting up a number of funding initiatives that will benefit the Cambridge science and technology communities.

This budget confirms the Government’s plan to reduce the Corporation Tax rate to 17% in 2020, continuing to make the UK an attractive place to do business and one of the most competitive tax rates in the G20.

The freezing of the indexation allowance for companies on capital gains from January 2018, will bring the corporate tax position in line with that of individuals.

A raft of measures were announced to tackle the digital economy, such as withholding tax on certain royalty payments made to overseas jurisdictions, and publishing a position paper setting out the challenges posed by the digital economy and the international corporation tax framework.

R&D

The UK R&D scheme continues to be globally competitive, with the Chancellor allocating a further £2.3 billion for investment in R&D research, as well as announcing an increase to the payable credit under the R&D Expenditure Credit scheme from 11% to 12% on qualifying expenditure from 1 January 2018.  Good news for Cambridge businesses and the Silicon Fen.

Employment Taxes 

The Government plans to launch a consultation on the introduction of the off-payroll working rules to the private sector following what it perceives to have been the successful application in the public sector from April this year.  It will be important that in any rolling-out of the legislation to the private sector that this does not inhibit growth nor create unnecessary burdens for those businesses that engage intermediaries.

As the development of electric car technology continues and ownership increases, we welcome the announcement that from April 2018, the provision of workplace charging facilities for employees using their own electric cars will no longer attract a benefit-in-kind liability.  This may be a valuable benefit for employees going forward and will reduce the administration and reporting requirements for employers where this benefit has been provided previously.

As part of the drive towards lower emissions, company cars that do not meet the ‘Real Driving Emissions’ standards will see an additional increase in company car tax rates from 6 April 2018 over and above those already announced.

 

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