Corporate Tax Roadmap

As part of her Autumn 2024 Budget, the Chancellor announced a Corporation Tax Roadmap. The main theme of the roadmap is to seek to provide a stable and predictable tax environment for business during the current Parliament so they can plan with some certainty.

The focus of the roadmap covered the following areas which the government feel is important to organisations.

• Corporation tax rate.
• Capital allowances.
• R&D reliefs.
• International corporate tax matters.
• Patent Box and intangible assets.
• Other corporation tax reliefs.
• Tax administration.

Many of these areas are due to remain unchanged for the foreseeable future, although the government has announced there will be consultation in some areas. For multinationals, although they will likely be encouraged to hear the government has no plans to change key features that make the UK a reasonably attractive investment location, it does look likely that compliance requirements will continue to become more onerous.

Transfer pricing

The Corporation Tax Roadmap set out that there will be continuing consultation in relation to transfer pricing with areas under consideration to include:

• the potential removal of UK-to-UK transfer pricing
• lowering the threshold for exemption from transfer pricing for medium-sized businesses
• multinational organisations to report cross-border related party transactions to HMRC
• a review of the cost contribution arrangements for IP development.

Depending on the outcome of the consultations, the likely direction of travel is that more companies will be brought into the UK transfer pricing net and that there will be additional reporting requirements from a transfer pricing perspective in the foreseeable future.  

The government confirmed it would support the continued implementation of Pillar 1 and Pillar 2 and review the Diverted Profits Tax rules.

With noise in the US, following Donald Trump’s victory, that continued Pillar 1 and Pillar 2 implementation may become more challenging, it will be interesting to see how this progresses and impacts the wider OECD community.

Capital allowances and other tax reliefs

The Tax Roadmap note that consultations will look to focus on areas such as pre-development costs, land remediation relief and full expensing on leased assets with the government wanting to provide greater clarity on what qualifies for capital allowances.  

R&D reliefs

The government has said it will not fundamentally change the R&D tax relief regime with a key focus continuing to be around improved compliance and quality in order to tackle the perceived non-compliance.

There will also be consultation on expanding advanced clearances for R&D reliefs, establishing an R&D expert advisory panel and the launch of an R&D disclosure facility.  

Shouldering the NIC burden

While the Corporate Tax Roadmap looked to provide certainty and stability and did not introduce immediate changes, businesses were still hit hard and asked to shoulder the burden of tax rises in connection with the increases in Employers National Insurance and the National Minimum Wage.

On top of this the Chancellor also announced that there would be an increase in the rate of interest charged on unpaid tax from 1 April 2025, to seek to encourage taxpayers to pay the right amount of tax due on time.

All this will require businesses to focus on future planning, with some businesses having put investment projects on hold, or withdrawing from them altogether, on the basis they have been made unviable due to the increased costs arising from the Chancellor’s statement.

Next steps

We expect more information to come out regarding the roadmap, especially in the run up to the next Budget. In the meantime, our range of tax specialists can advise you on any of the above elements of the roadmap. Please get in touch with Simon Crookston or Andy Hawley in the first instance.