Corporation tax rates

The main rate of corporation tax will remain at 25% and the small profits rate will stay at 19% for the financial year starting 1 April 2025. The government has committed to maintaining full expensing, the annual investment allowance, research and development (R&D) relief rates and the patent box.

Furnished holiday lettings

The specific tax treatment and reporting requirements for furnished holiday lettings (FHL) will end, as previously announced. From 6 April 2025, for income tax and CGT and from 1 April 2025 for corporation tax, FHL income and gains will be taxed in the same way as other property income and gains.

Capital allowances

The 100% first-year allowances for qualifying expenditure on zero-emission cars and for qualifying expenditure on plant or machinery for electric vehicle charge points will be extended to 31 March 2026 for corporation tax and 5 April 2026 for income tax.

The government is exploring extending full expensing to assets bought for leasing or hiring “when fiscal conditions allow”. HMRC will continue to work with stakeholders to improve guidance in areas of uncertainty within the capital allowances system.

Business rates

Eligible retail, hospitality and leisure (RHL) properties in England will receive 40% relief on their business rates liability for 2025/26 up to a cash cap for a business of £110,000.

The small business multiplier in England will be frozen at 49.9p. The standard multiplier will be uprated by the September 2024 CPI rate to 55.5p. RHL properties will enjoy permanently lower multipliers from 2026/27 paid for by a higher multiplier for properties with rateable values above £500,000. Further changes to business rates and business rates valuations are under discussion.

Private schools in England will no longer be eligible for charitable rate relief from April 2025, as previously announced. Private schools that are ‘wholly or mainly’ concerned with providing full-time education to pupils with an education, health and care plan will remain eligible for VAT relief.

Cultural tax reliefs

The rates of theatre tax relief, orchestra tax relief and museums and galleries exhibitions VAT relief will be set at 40% for nontouring productions, and at 45% for touring productions and all orchestra productions from 1 April 2025, as already legislated.

Film tax credit

From April 2025, and as already legislated, UK films with budgets under £15 million and a UK lead writer or director will be able to claim an enhanced 53% rate of audio-visual expenditure credit, known as the independent film tax credit. Expenditure is eligible if it is incurred after 1 April 2024 on films that began principal photography on or after 1 April 2024.

Freeports and investment zones

The freeports and investment zones programmes will continue, including approval of the East Midlands investment zone to support advanced manufacturing and green industries, and the designation of five new customs sites in existing freeports.

Reserved investor fund

The government will proceed with the introduction of the reserved investor fund (contractual scheme).

Alternative finance

Changes to certain alternative finance tax rules for capital gains tax, corporation tax, income tax and ATED from 30 October 2024 will ensure that the tax consequences are the same for those using alternative and conventional financing arrangements across the UK.

Transfer pricing

A consultation in spring 2025 will look at lowering the thresholds for exemption from transfer pricing rules for medium-sized businesses while retaining an exemption for small businesses. The government will consult further in spring 2025 on reforms to the rules on transfer pricing, permanent establishments and diverted profits tax.

OECD Pillar 2

The government will introduce the undertaxed profits rule contained in the Pillar 2 rules. It will take effect for accounting periods beginning on or after 31 December 2024.

Climate change levy (CCL)

The main rates of CCL for gas, electricity and solid fuels will be uprated in line with RPI in 2026/27. The reduced rates will remain at an unchanged fixed percentage of the main rate.