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UK summer budget announced
The Summer Budget 2015 has announced measures which will no doubt create a lot of happy voters by the end of Parliament.
The Living Wage will increase salaries and whilst companies are arguably compensated by the reduction in the corporation tax rate to 18% by 2020, the tax base has been increased again by denying the use of losses against controlled foreign company (CFC) charges, taking away relief for goodwill deductions and yet again increasing the tax contribution by banks.
Tax highlights for business include:
- Tax rate reducing to 19% in 2017 and 18% in 2020
- Withdrawal of loss relief for CFC charges, effective immediately
- Withdrawal of relief for amortisation or impairment of purchased goodwill or customer intangibles, effective for assets acquired from now on
- Acceleration of corporation tax payments for accounting periods starting after 1 April 2017
- Reduction in the bank levy, replaced by a new 8% surcharge
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Overall, it is a relatively ingenious Budget in that the Red Book reports a significant increase in expected tax revenues over the next five years, despite the fact a reduction in the headline rate of corporation tax has been promised. Clearly, someone has to pay for that and in addition to the acceleration of corporation tax payments there are a number of measures that will hit savers and investors.