The Chancellor announced in his first Budget speech that approximately three-quarters of the £6.4 billion reduction in corporation tax take resulting from the 1% per annum corporation tax main rate reductions would be funded by changes to the capital allowances regimes. In addition the small companies’ corporation tax rate is to be reduced from 21% to 20% with effect from 1 April 2011 at a cost of £3.8 billion by 31 March 2015.
The Chancellor also announced a more detailed programme for reform of the whole corporate tax system to commence in autumn 2010. Red Book (para 1.62 page 26) referred to the Government providing ‘greater certainty for business by committing to principles for corporate tax reforms’. Red Book goes on ‘in particular it [the Government] intends to develop its view that in general a broad base a low rate and a more territorial approach...
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