UK Corporation Tax: Are You Successfully Navigating the UK Corporation Tax Regime?

The UK Autumn Budget 2024, the first by a Labour government for 14 years, featured many headline announcements. It also introduced the Corporate Tax Roadmap, promising stability and certainty from a tax perspective for UK companies throughout this Government’s term.  

The Corporate Tax Roadmap has confirmed no material changes in UK company taxation whilst this Government is in place. Tax rate(s) will stay: 25% main rate, 19% small profits rate, with marginal relief available. Importantly, Capital Allowance and Research & Development reliefs will also remain intact. A commitment to international tax developments was also confirmed. 

This stability and certainty are welcome, but there are still a number of tax issues facing non-UK resident companies that hold UK property. 

Property records 

When disposing of property assets there are multiple gain calculation methods available, which differ depending on the type of property being disposed of. Companies should have the relevant information available to guarantee the best possible tax treatment is claimed. Some of this information (e.g. cost, incidental costs of acquisition, market values at April 2015/2019) may not be immediately available but is worth collating as it can ensure valuable deductions in the gain calculation. 

Companies should ensure that they track the base cost of their UK properties, especially when any part disposals are deemed to have occurred, as they may utilise some of the base cost against a potential gain (e.g. if a lease premium is received). It is therefore important to be aware of less obvious capital events related to UK property that are treated as UK chargeable gains or could be treated as part disposals of the relevant UK property for UK tax purposes (e.g. receipt of lease premiums, proceeds from option agreements, option agreements lapsing, etc.).  

An associated problem? 

For UK companies with ‘associated companies’, the calculation of CT may change. Associated companies are, broadly, those connected by ownership. A change in the rules to determine ‘associated companies’ from 1 April 2023 was a subtle change that has perhaps been missed by some entities. However, the new ‘associated companies’ rules are important as they confirm a wider basis of connection, with entities no longer split by being directly owned by an individual or a trust; the key now is considering common control. The number of associated companies that a company has is key because it affects both the Corporation Tax rate applicable and the tax payment regime/deadline.

Loan interest 

Companies holding UK property often have related loans in place. The tax implications for interest payments are complex, involving a number of relevant matters to consider such as the Corporate Interest Restriction, transfer pricing, and the late paid interest rules (the latter two for related party loan interest only). These rules are in place to ensure that companies only receive deductions for interest expenses on a commercial basis and need to be carefully considered.  

Speak to Equiom 

Our multi-jurisdictional Tax Compliance and Advisory Services are designed to support your business in managing its tax obligations robustly. By partnering with us, you can rely on technical experts committed to ensuring your tax strategies are both tax optimum and compliant as needs evolve and tax landscapes change.  

Contact our Tax experts Kevin Cowley and Alex Birch to learn more.  

This article was first published in Portfolio Magazine, January 2025 issue.  

This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. This article cannot be relied upon to cover specific situations, and you should not act, or refrain from acting, upon the information contained within this article without obtaining specific professional advice. Please contact Equiom to discuss these matters in the context of your particular circumstance. Equiom Group, its partners, employees, and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.