Business tax

National insurance contributions and employee tax

Employer NICs up to the upper earnings limit will be abolished for apprentices aged under 25 years from April 2016.

The annual £2,000 Employment Allowance for employer NICs will be extended to care and support workers from April 2015.

The government has decided not to proceed with changes to the taxation of employee shares that would have introduced a ‘marketable security’.

Television productions and orchestras

The government will explore with industry whether to reduce the minimum UK expenditure for high-end television relief from 25% to 10% and modernise the cultural test. The aim is to bring the TV relief in line with film tax relief. From 1 April 2015, there will also be a new tax relief for the production of children’s television programmes at a rate of 25% on qualifying production expenditure. There will be consultations in early 2015 on the introduction of an orchestra tax relief from 1 April 2016.

Research and development (R&D) tax credits

From 1 April 2015, the rate of the above-the-line credit for qualifying R&D expenditure will be raised from 10% to 11%. The rate of the small and medium enterprise scheme will be increased from 225% to 230%. Qualifying expenditure for R&D tax credits will be restricted so that the costs of materials incorporated in products that are sold are not eligible, with effect from 1 April 2015. An advanced assurance scheme will be introduced for small businesses making their first claim for R&D tax credits.

Corporate debt

There will be wide-ranging changes to the legislation on corporate debt and derivative contracts. This will include a clearer and stronger link between commercial accounting profits and taxation, basing taxable amounts on items of accounting profit or loss. It will also include the introduction of a new relief for companies in financial distress and new rules to protect against tax avoidance.

There will be a new exemption from withholding tax on interest on qualifying private placements (a type of unlisted debt) to help unlock new finance for businesses and infrastructure projects. As part of the review of the legislation on corporate debt, the government will repeal rules concerning loans made to UK companies by a connected company in a non-qualifying territory.

Bank losses and other business tax issues

The government will restrict the amount of a bank’s annual profit that can be offset by carried-forward losses to 50% from 1 April 2015. The restriction will apply to losses accruing up to 1 April 2015 and will include an exemption for losses incurred in the first five years of a bank’s authorisation.

From 1 January 2015 business contributions to Flood and Coastal Erosion Risk Management (FCERM) projects will become deductible expenditure for corporation tax and income tax.

From 1 April 2015, businesses will be required to account for VAT on the actual consideration received when prompt payment discounts are offered.

Business rates

The doubling of small business rate relief will be continued for a further year from 1 April 2015. The transitional arrangements for properties with a rateable value of £50,000 and below will be extended from 1 April 2015 to 31 March 2017.

The rules will be changed so that alterations to rateable values can only be backdated to the period between 1 April 2010 and 1 April 2015. The changes will apply for Valuation Office Agency alterations made before 1 April 2016 and ratepayers’ appeals made before 1 April 2015. The business rates discount will be increased to £1,500 for retail and food and drink premises with a rateable value of £50,000 and below, up to the state aid limit for one year from 1 April 2015. The 2% cap on the RPI increase in the business rates multiplier will continue for an additional year from 1 April 2015.

There will be a government review of the future structure of business rates, which will report by the time of Budget 2016. The review will be fiscally neutral and consistent with the government’s agreed financing of local authorities.