April 1 business tax changes: corporation tax rate remains 19%
2 Apr 2020
HMRC has updated its guidance confirming that the government has shelved its original plans to lower corporation tax, with the main rate (for all profits except ring fence profits) for the years starting 1 April 2020 and 2021 remain at 19%, as announced at Budget 2020
2 Apr 2020
Under the previous government, there were plans to cut corporation tax by 2% from April 2020, bringing the rate down to 17%, but this was ruled out as soon as the Conservatives came to power last December with a large majority.
Keeping the corporation tax rate at 19% will raise £46bn in year one, rising to £75bn a year by 2024-25.
The cut had been a Budget 2016 commitment but was viewed as a costly measure and as an unnecessary reduction by many commentators as the UK has one of the lowest corporation tax rates in the G20.
The special corporation tax rate for unit trusts and open-ended investment companies is also unchanged at 20%.
The increase in the national insurance contributions (NICs) threshold is going ahead as planned, up from £8,632 to £9,500 in April. This is set to provide a £104 average increase in earnings.
For 2020/21 the threshold at which employees start to pay NICs will rise to £9,500 per year for both employed (Class 1) and self-employed (Class 4) people.
The increase in the primary threshold and the lower profits limit is a step towards the government’s aim to raise these amounts to £12,500 per year to align them more closely with the income tax personal allowance.
The Conservative manifesto in the run up to December’s general election promised no increase in income tax, VAT or NICs.