Corporate Tax Changes in the UK from April 2024: What Businesses Need to Know

Ryan Anderson

Corporate Tax Changes in the UK from April 2024: What Businesses Need to Know

The UK’s financial landscape is set for significant changes starting 1 April 2024, especially concerning corporate taxes. These changes, relevant to businesses of various sizes and sectors, include modifications to Corporation Tax rates and a restructuring of reliefs for research and development (R&D) and creative industries. Here’s a breakdown of what these changes entail.

1. Corporation Tax Rates Adjustments

For Larger Companies

  • 25% Tax Rate: Companies with annual profits exceeding £250,000 will be taxed at 25%.

For Smaller Companies

  • 19% Small Profits Rate: This rate applies to companies with profits of no more than £50,000 annually.
  • Marginal Relief: Companies earning between £50,000 and £250,000 will be taxed at the higher 25% rate, but with a marginal relief that effectively brings the rate closer to 19% as profits approach £50,000.

Group Companies

  • Companies that are part of a corporate group or connected will share the £50,000 and £250,000 thresholds, making the 25% rate more likely to apply.

2. Research & Development (R&D) Reliefs Reform

From April 2024, a new unified R&D scheme for limited companies will replace the existing R&D Expenditure Credit (RDEC) and Small and Medium Enterprise (SME) schemes. Additionally, there will be a new scheme specifically for ‘R&D intensive SMEs’. This overhaul addresses the high levels of non-compliance within the R&D sector and includes:

  • New Provisions for Contracted R&D Activities: Adjusting who can claim relief.
  • Qualifying Expenditure: Focusing on R&D conducted in the UK.
  • Criteria for ‘R&D Intensive’ Companies: Including a new approach for fluctuating status.
  • Restrictions on R&D Relief Nominations and Assignments.

3. Creative Industries Tax Reliefs

Film, TV, and Video Games

Introduction of Refundable Expenditure Credits: Starting 1 January 2024, the Audio-Visual Expenditure Credit (AVEC) for film and TV and the Video Games Expenditure Credit (VGEC) for video games will be implemented.

4. Annual Tax on Enveloped Dwellings (ATED)

Increase in ATED Charges: From 1 April 2024, ATED annual charges will rise by 6.7%, aligned with the September 2023 CPI.

The adjustments in tax rates, along with the overhaul of R&D and creative industries reliefs, signify a shift towards a more streamlined and compliance-focused tax environment. At MMG Chartered Accountants, we are dedicated to helping our clients navigate these changes, ensuring compliance and optimising tax strategies. Do reach out for tailored guidance and support in adapting to these new tax landscapes.