George Osborne announced in this year’s Summer Budget that corporation tax for businesses will be cut from 20% to 18% by 2020, with an interim cut of 1% in 2017.
Past reductions have been beneficial because it has created jobs and increased investment, as Osborne mentioned, despite being the lowest rate of corporate tax in the G20, according to The Independent. “Now at 20% for large and small businesses alike we have the joint lowest rate of corporation tax in the G20 and so there are now those who say we don’t need to do more,” Osborne said.
The reduction is expected to cost £2.47 billion by 2020, but Osborne highlights that these cuts put across a message to other countries, announcing that Britain is open for business, as quoted in The Independent. Alongside this, in an attempt to support smaller businesses, the Chancellor will raise the Employment Allowance by £1,000 by April 2016.
British private equity firms will also be expected to pay higher tax bills as the Treasury now apply the full rate of capital gains to deal profits, according to The Financial Times. This would be done so by preventing managers to use loopholes in the system in order to pay less.
By removing the base cost shift, it modernises and tightens the tax system, especially after April saw a closing of a loophole that meant that private equity firms would treat management fees as capital gains, but they are now taxed as income.
The FT reports that in future, the government may implement international guidelines so that tax relief can be revised for interest payments on corporate debt.
A total of US$4.88 trillion of debt has been sold so far this year reports Dealogic, close to the level of 2007 when US$4.91 trillion of bonds were issued over the same period.
The German industrial gases group has ended talks with its US peer on a potential union to establish a market leader.
The US exchange said it will introduce incentives from next month to make lower-volume exchange traded funds easier to buy and sell.
A survey of 1,000 merger and acquisition dealmakers finds that seven in 10 expect Brexit uncertainty to limit the number of deals.