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Tax rates
As announced last year, a new "starting rate" of 10% will apply to companies with profits up to £10,000 from 1 April 2000. For companies with profits from £10,000 to £50,000, an effective marginal tax rate of 22.5% will apply, so a profit of £50,000 is taxed at 20%. On profits above £50,000, the rates remain the same as for the year to 31 March 2000 - 20% up to £300,000, then an effective rate of 32.5% to £1.5m. The main rate of 30% applies where total profits exceed £1.5m.
Groups of companies
Following an important ruling in the European Court of Justice, the rules on tax reliefs for groups of companies have been radically revised to remove discrimination against those groups which include foreign companies. From 1 April 2000, UK companies can be part of a "loss relief" group even if other group companies are foreign, and UK branches of foreign companies will be able to claim or surrender losses from or to other UK group companies. Foreign companies, whose profits are not chargeable to UK corporation tax, will not be able to claim or surrender losses under these rules. The rules which allow group companies to transfer capital assets without triggering a charge to tax are also extended to include the UK branches of foreign companies within the group, as long as the assets remain within the charge to UK tax (ie are used for the purposes of the UK branch's trade). Company gains
Companies which sell "substantial shareholdings" of over 30% in another company may soon be able to defer the capital gain in the same way as for sales of other significant assets such as buildings and fixed plant. A consultation has been announced on the possibility of extending "rollover relief" to include this situation.
Corporate venturing scheme (CVS)
A new relief is introduced for companies investing in other companies from 1 April 2000. The rules are complex, and it is not clear how many companies will want or be able to qualify. The reliefs are similar to the EIS scheme for individual investors: 20% corporation tax rebate on the amount subscribed; rebate becomes permanent if shares held for 3 years; gains on CVS investments can be deferred if new CVS shares are purchased (compared with an exemption of gains after 3 years under EIS).    BACK