The Government has confirmed that corporate interest restriction and other provisions that were removed form the UK Finance Bill earlier this year will be included in the next Finance Bill, which is set to be published “as soon as possible after the summer recess”.
According to a press release, the Finance Bill will legislate for all policies that were included in the pre-election Finance Bill. This will include legislation to introduce restrictions on corporate tax deduction for interest payments.
Any policies that were originally scheduled to start from April 2017 – including this one – will be considered effective from that date once the Finance Bill has been introduced.
At the same time, HM Revenue & Customs (HMRC) has published a revised version of the interest restriction legislation, which presents a major change to the UK tax system, as the provisions introduce a new ‘fixed ratio’ rule that will limit the tax relief available for businesses, in respect of interest payments. The changes will have particular impact for highly geared groups, especially in the real estate and infrastructure sectors.
The corporation tax loss reforms in the Finance Bill are designed to increase flexibility in how carried forward losses can be used, including by way of group relief. However, the reforms also mean that companies with profits in excess of £5m will suffer loss restrictions and will only be able to offset 50 per cent of their profits against losses carried forward in a single year.
In separate news, it has been confirmed that legislation that provides for new corporate criminal offences of failure to prevent the facilitation of tax evasion will have effect from 30 September this year.
Latest posts by ELS Law (see all)
- HMRC to update “confusing” guidance surrounding stamp duty surcharge – February 16, 2018
- City law firm selected to become exclusive UK representative of leading global legal network – February 15, 2018
- Commercial property will “have its fair share of excitement” this year – February 14, 2018