Now the UK is all set to extricate itself from the EU, the British government is doing its best to encourage foreign entrepreneurs to come to the UK by offering some tempting business incentives.
With the British economy growing faster than the US, Japan and France, and with employment at an eleven year low, Chancellor Philip Hammond is determined to keep “Britain at the cutting edge of the global economy” and is taking the “next steps in preparing Britain for a global future.”
His incentives include the confirmation that the main rate of corporation tax will drop from 20% to 19% for the 2017 financial year and will then reduce even further to 17% in 2020. According to figures from the IMF’s World Economic Outlook Database and the Deloitte Corporation Tax Rates 2017, the UK is sitting in an excellent position to offer foreign businesses one of the best rates of corporation tax of the world’s top 10 economies, surpassed only by Canada and one other European country – Germany.
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For small businesses there is also good news as the VAT registration threshold has risen to £85,000. An extra plus is that for businesses with turnover below the VAT registration threshold the introduction of quarterly reporting will be delayed by one year.
In line with the rise in online businesses and internet sales, the UK government has had to rethink the way it collects VAT due to some overseas businesses ducking out of paying VAT on goods sold via online marketplaces. So with this in mind, the government will be introducing a ‘split payments’ collection model which will use the latest technology to allow VAT to be extracted directly from transactions at the point of purchase. Although the noose will be tightening on those foreign businesses which enjoyed the previous VAT loophole, the good news is that this new model will simplify and smooth the system for more scrupulous entrepreneurs who want to stay on the right side of the British tax man.
The online VAT rethink will also include the registration of all fulfillment houses (which store or ship products for online sales). By 2018 all fulfillment businesses will have had to register with the government’s customs department, as well as keep thorough records and carry out due diligence checks on all overseas clients.
Tax credits and tax relief
For businesses that require research and development (R&D) in the fields of science and technology, administrative changes will be made to the tax credits system to allow for more simplicity and certainty for those that wish to make claims.
And for production companies that produce high-end TV, animation and video games, the government will be seeking State Aid so that tax relief for these industries can be extended beyond 2018.
So with the reduction in corporation tax and the VAT threshold, and the simplification of tax recuperation and relief, and the extension of tax credits, the UK is continuing its mission to become the most business-friendly country in the world.