This article outlines some changes to corporation tax, capital allowances and the R&D tax relief that may be applicable to your business over the next couple of years.

1. Corporation tax rates

The corporation tax will remain at 19% until 1 April 2023 but the rate will then increase to 25% for companies with profits over £250,000. The 19% rate will become a small profits rate payable by companies with profits of £50,000 or less. Companies with profits between £50,001 and £250,000 will pay tax at the main rate reduced by a marginal relief, providing a gradual increase in the effective corporation tax rate.

2. Capital allowances - Plant and machinery

Most corporate and unincorporated businesses can utilise a £200,000 annual investment allowance (AIA) to claim 100% tax relief on their qualifying expenditure on plant and machinery. The £1 million allowance will be retained until 31 March 2023. Transitional rules will apply to accounting periods that span 1 April 2023.

A reminder of super-deductions

Between 1 April 2021 and 31 March 2023, companies investing in qualifying new plant and machinery can benefit from new capital allowances, termed ‘super-deductions’ or ‘first year allowances’, as follows:

• a super-deduction of 130% can be claimed on most new plant and machinery investments that ordinarily qualify for the 18% main rate writing down allowances
• a first-year allowance of 50% can be claimed on most new plant and machinery investments that ordinarily qualify for the 6% special rate writing down allowances.

These reliefs are not available for unincorporated businesses.

3. Capital allowances – Structures and buildings

A Structures and Buildings Allowance (SBA) was introduced with effect from 29 October 2018 to
relieve costs for new structures and buildings used for qualifying purposes. A business must hold an allowance statement containing certain information to be eligible to claim SBA. Minor changes will be made to the allowance statement requirements to clarify the information required to be kept.

4. Research and Development relief reform

Research and Development (R&D) tax reliefs for companies will be reformed to:

• support modern research methods by expanding qualifying expenditure to include data and cloud costs
• more effectively capture the benefits of R&D funded by the reliefs through refocusing support towards innovation in the UK
• target abuse and improve compliance. These changes will take effect from April 2023.

If any of these changes to business tax impact on you and you would like some advice, please contact us by calling 01623 490 120 or email This email address is being protected from spambots. You need JavaScript enabled to view it.