Corporation Tax: 2018 Budget changes (CT600 Budget insert)
Updated 9 July 2019
© Crown copyright 2019
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/publications/corporation-tax-budget-changes-ct600-budget-insert/corporation-tax-2017-budget-changes-ct600-budget-insert
Changes affecting the CT600 Company Tax Return form
Announcements in the October 2018 Budget mean that we will be updating the CT600 Company Tax Return guide. In general, you cannot make a claim under any new proposal until the Finance Bill receives Royal Assent and becomes law. We’ll update the HMRC Corporation Tax online service as quickly as possible.
Rates of Corporation Tax
For the financial year 2019 starting on the 1 April 2019, the rate of Corporation Tax is 19%. The rates for ring fence profits are unchanged.
Rates and Allowances: Corporation Tax
Anti-Tax Avoidance Directive (ATAD) – Controlled Foreign Companies (CFCs)
This changes the CFC rules in Part 9A TIOPA 2010 and will mostly affect large companies. Two changes will ensure that the UK CFC rules are compliant with the EU ATAD.
The first change ensures that certain profits generated by UK activities are no longer eligible for full or partial exemption under the CFC finance company rules.
The second change expands the scope of the CFC control rules by taking into account interests held by UK companies and their worldwide associates.
The changes came into effect from 1 January 2019.
You can find more information in the Anti-Avoidance Directive about controlled foreign companies guidance.
Environmental Enhanced Capital Allowances
This change will update the lists of energy-efficient and environmentally-beneficial technologies and products, which are eligible for first-year allowances (FYA).
This will also end the FTA for all products on the Energy Technology List (ETL) and Water Technology List (WTL), including the associated first-year tax credit (FYTC) from April 2020 onwards.
You can find more information in ending enhanced capital allowances for energy and water efficient plant and machinery policy paper.
Non-compliance with the off-payroll working rules (IR35) in the private sector
The government intends to improve compliance with the intermediaries’ legislation (commonly known as IR35) by extending off-payroll working reforms to medium and large-sized organisations in the private sector. Off-payroll reforms were first introduced in the public sector from April 2017.
The private sector changes will come into effect from 6 April 2020 and will apply across the UK. The government will consult on the detailed operation of the change in 2019. Legislation will be introduced in Finance Bill 2019 to 2020.
Responsibility for determining whether the rules apply will move from the worker’s intermediary (usually a personal service company, partnership, or other individual) to the large or medium sized organisation in the private sector engaging the worker’s services. Responsibility for deducting and paying any tax and National Insurance contributions due is proposed to move to the organisation, agency, or other third party paying the individual’s intermediary company.
The reform will not apply to small businesses.
You can find more information in off-payroll working in the private sector consultation outcome.
Special Writing-Down Allowance (WDA) rate reduction
This change will reduce the special rate of WDA that businesses can claim from 8% to 6% on:
- 1 April 2019 for Corporation Tax
- 6 April 2019 for Income Tax
For businesses with chargeable periods that span these dates, a hybrid rate will be used instead.
The hybrid rate is based on the proportion of a chargeable period falling before the change date and the corresponding proportion falling after the change date. The hybrid rate should be rounded up to the nearest two decimal places.
Types of expenditure that attract the special rate of WDAs include, but are not limited to:
- long-life assets
- features integral to buildings (electrical, lighting and heating systems, etc)
- thermal insulation of buildings and certain cars with high CO2 emissions
The main pool rate is unchanged (currently 18%). The special rate for ring fence trades is also unchanged (currently 10%).
You can find more information in the reduction of rate of special writing down allowance for capital allowances policy paper.
Structures and Buildings Allowance
To support business investment, from 29 October 2018 a new capital allowance will be available to businesses to claim for the capital construction costs of certain new structures and buildings. These costs will include those directly related to physically constructing the asset, as well as preparatory or improvement works, relieved across a 50 year period at two percent annually on a straight-line basis.
It will not apply to residential property (dwellings).
The Structures and Building Allowance (SBA) will operate as an annual writing down allowance, becoming allowable when the building or structure comes into qualifying use. It will be available as a deduction of the qualifying costs against profits chargeable to income tax or corporation tax. For accounting purposes, qualifying costs must kept in a separate pool for each structure or building.
You can find more information in the structures and buildings allowance policy paper.
Taxing non-resident gains on immovable property
This change extends the UK’s tax base to include gains by non-UK residents on disposals of interests in non-residential UK property (commercial buildings, and other UK land that is not a dwelling).
It also extends the charge to gains on disposals of interests in residential property accruing non-UK resident diversely held companies, those widely held funds not previously included, and to life assurance companies
The change also taxes non-UK residents’ gains on interests in UK property rich entities (for example, selling shares in a company that derives 75% or more of its value from UK land). These are called indirect disposals.
The change will apply to disposals made on or after 6 April 2019
You can find more information in changes to taxing gains made by non-residents on UK immovable property policy paper.
UK property income of non-UK resident companies
As announced at Autumn Budget 2017, non-UK resident companies that carry on a UK property business or have other UK property income will be charged to Corporation Tax, rather than being charged to Income Tax as at present.
The government has included legislation in Finance Bill 2018 to 2019 and the changes will have effect on and after 6 April 2020.
You can find more information in Corporation Tax: UK property income of non-UK resident companies policy paper.
Temporary increase in Annual Investment Allowance (AIA)
Legislation has been introduced in Finance Bill 2018 to 2019 to temporarily increase the Annual Investment Allowance to £1,000,000. The temporary increase will be for two years, from 1 January 2019 to 31 December 2020. The AIA limit will then revert to a maximum of £200,000 from 1 January 2021.
You can find more information in temporary increase in the Annual Investment Allowance policy paper.
Transferable Tax History (TTH) and Petroleum Revenue Tax (PRT) issues for late life oil and gas assets
This change affects oil and gas companies that operate in the UK or on the UK Continental Shelf (UKCS) and provides a TTH mechanism and amends the PRT rules on retained decommissioning costs.
TTH will allow a seller of an interest in a UKCS oil licence to transfer some of its tax history to the buyer of the field who will then be able set the decommissioning cost of the field against the TTH.
The change will also give PRT relief when a seller retains a decommissioning liability. Relief will be available to the buyer where the seller subsequently incurs decommissioning expenditure or where the seller provides the funds for the buyer to decommission.
The change allows for the TTH mechanism to be available for deals where the transfer of the licence has been approved by the OGA on or after 1 November 2018.
The change also allows for PRT relief for retained decommissioning expenditure to be available for licence transfers approved by the OGA on or after 1 November 2018.
You can find more information in the oil and gas taxation: transferable tax history and retention of decommissioning expenditure policy paper.
More information about the Budget changes
Budget 2018: overview of tax legislation and rates (OOTLAR)
Corporation Tax: service availability and issues
Online filing and electronic payment
All companies have to file their Company Tax Return online for any accounting period ending after 31 March 2010. Companies also have to pay any Corporation Tax and related payments electronically.