Our experts give their comments on the Budget 2020 announcement in relation to Corporate Tax and VAT.
Corporate Tax
“The Chancellor has confirmed that the rate of Corporation Tax will remain at 19%, but no promise of any future cut. Surely a missed opportunity to promise lower rates in the future given future projected Budget surpluses.”
Neil Insull, Partner
“The increase in Research and Development Expenditure Credit (RDEC) rates to 13% was widely expected. But only one in seven businesses claim R&D relief under the RDEC scheme, primarily large businesses. Smaller businesses claiming under the SME scheme will be disappointed not to hear of any change to the R&D tax credit amount. However, there is a nugget of good news in that the Government has delayed for a year, to April 2021, the previously announced PAYE cap on R&D claims under the SME scheme. They will also consult on the design of the cap. These measures are very welcome news. The cap is clearly intended to stop abuse of the relief, but it was judged by some as the proverbial sledgehammer cracking nuts.”
Neil Insull, Partner
VAT
“The Government has finally taken the decision to remove VAT from digital publications. It follows a recent Tribunal decision that indicated that digital publications should have always been VAT free, the same as hard copy books.”
Alan Pearce, Partner
“The reintroduction of VAT postponed accounting for all imports from 1 January 2021 will be a welcome and long overdue cash flow benefit for UK importers. It will also place the UK on a competitive footing with many EU countries that already allow import VAT to be set off in their VAT returns rather than have to pay it at the time of importation, only to claim it back a month later. Through its abolition of VAT on sanitary products, the Government is demonstrating that it is preparing to exercise its new-found freedom to set its own VAT rates.”
Alan Pearce, Partner
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