TAX

SUMMARY OF SOME OF THE CORPORATE AND BUSINESS TAX PROVISIONS CONTAINED IN THE FINANCE ACT 2009

  1. Corporation tax rates

    The main rate of corporation tax which applies to companies with profits of more than £1.5 million remains at 28% for the Financial Years 2009 and 2010.

    The small companies corporation tax rate which applies to companies with up to £300,000 of profits remains at 21% from 1 April 2009. The planned increase to 22% has been deferred until 1 April 2010.

    The effective marginal corporation tax rate for profits between £300,000 and £1.5 million is 29.75%.

    • Corporation tax rates look attractive compared to the current and proposed rates of income tax which would be paid by a sole trader.

  2. Income shifting

    The government intended that legislation would take effect from 6 April 2008 to address “income shifting” i.e. shifting part of an individual’s income to someone else who is subject to a lower rate of tax.  The government has now decided to defer action and has not brought forward legislation in Finance Act 2009. The issue will be kept under review.

  3. Extension of trading loss relief

    The period of relief for trading losses of unincorporated businesses made in the basis periods for the years 2008/09 and 2009/10 is extended. A three year carry back of the loss will be available (subject to certain restrictions).

    The trading loss carry back provisions for companies are also now extended for up to three years in any situation in which a trading loss is made in an accounting period ending either (or both):

    • after 23 November 2008 and before 24 November 2009;

    • after 23 November 2009 and before 24 November 2010.

      The total extended loss relief across both periods is capped at
      £50,000, even if the available losses exceed this amount.