The value of corporate tax reliefs in the UK has risen £10.3bn ($12.9bn) in a year – from £113bn to £123.3bn – to reach the highest level in at least five years, shows new research from Thomson Reuters.
Tax reliefs have become even more important for UK corporates as the tax burden on businesses increases. In April, the rate of Corporation Tax rose by almost a third from 19% to 25%. The Office for Budget Responsibility expects businesses will pay £73.7bn in Corporation Tax in 2023-2024, an increase of 37% from £53.8bn in 2022-2023.
It is expected that the headline rates of tax for businesses will remain high for the foreseeable future as the Government looks to keep the public sector debt at a manageable level, making it crucial that businesses make the most of tax breaks which are available to them.
Thomson Reuters head of corporate tax and trade, Ray Grove, has said that investing in technology can help corporate tax departments keep up to date on which tax reliefs they are entitled to claim. “Tax breaks are enormously valuable to companies, particularly at a time when these customers are having to contend with higher headline rates. If corporate tax leaders don’t take advantage of the tax reliefs that are available to their company, then the business will have less to reinvest in growth,” says Grove.
“It can be incredibly difficult for corporates to keep on track of which tax breaks are available to them and to ensure they are applying rules relating to those tax breaks accurately. Technology solutions such as ONESOURCE and Checkpoint Edge offer global coverage for compliance, reporting, research and planning. They play an important role in helping customers ensure they are paying the right amount of tax.”
Examples of tax reliefs that are available to UK businesses and value claimed in past year:
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- Double Taxation Relief – this ensures that UK resident businesses are chargeable to corporation, rather than income tax, avoiding double taxation – £5,900m
- Group Relief – an exemption of Stamp Duty when properties are transferred within the same group of companies – £935m
- Exemption of energy used in some forms of transport – This Climate Change Levy relief applies to the use of commodities in transport e.g. electrified rail transport – £55m