The Chancellor's Autumn Statement
Tuesday 30th November 2010
Having scrapped the pre-Budget report of previous years, Chancellor George Osborne yesterday made his Autumn statement to Parliament.
Much of the focus was on the Office for Budget Responsibility's Autumn Forecast and the international assistance package to Ireland. However, the Chancellor also announced a programme of significant corporation tax reforms which will build on previously announced changes to the capital allowance regime and reductions in the main rate of corporation tax from 28% to 24% over the next four years.
The corporation tax reforms will focus on:
- the controlled foreign company (CFC) rules,
- the taxation of intellectual property including the creation of a 'Patent Box', and
- the taxation of foreign branches.
Following consultation this Autumn and Winter, initial legislation on CFCs foreign branch reforms will be introduced in Finance Bill 2011. Further consultation on CFCs and the 'Patent Box' will follow next Autumn with legislation timetabled for inclusion in Finance Bill 2012.
As the consultation and legislative process progresses we will keep clients and contacts informed both through Insights and discussion with those who we are aware will be affected. However, please contact Alastair McQuater or your usual Buzzacott contact if you wish to discuss the impact of these proposals on your company.
As proposed, the Patent Box regime will be optional, but companies opting in can expect profits from patents first commercialised after 29 November 2010 to be taxed at a 10% rate from 1 April 2013.
We aim to keep our clients aware of changes in tax law, including government proposals. This Government has made a commitment to publish draft legislation at least three months before the Finance Bill, for comment. We expect draft legislation to be published on 9 December, covering:
- simplification of the treatment of corporate capital gains
- furnished holiday lettings
- HMRC powers
We will publish Insights reporting on the contents of the legislation.