Finance Act 2024
Overview
The Finance Act 2024, recently enacted by the UK government, introduces significant changes to the country’s tax and financial regulations. This comprehensive piece of legislation impacts various aspects of businesses and individuals, aiming to enhance fiscal transparency, stimulate economic growth, and address emerging challenges. In this article, we delve into the key provisions of the Finance Act 2024, focusing on its implications for businesses and the economy.
The Finance Act 2024 is a crucial piece of legislation that sets out the government’s fiscal policy for the upcoming financial year. It encompasses a wide range of measures, including changes to tax rates, allowances, and reliefs, as well as new regulations aimed at promoting investment and innovation. One of the key objectives of the Finance Act 2024 is to simplify the tax system and make it more efficient. To achieve this, the Act introduces several measures to streamline tax compliance and reduce administrative burdens on businesses.
The key requirements of the Finance Act 2024 include:
- Corporate Tax Rates: The Finance Act 2024 introduces changes to corporate tax rates, with the aim of making the UK more competitive in the global market. The main provisions include:
- Reduction in the main rate of corporation tax from 19% to 18% for the financial year 2024-25.
- Introduction of a new Small Profits Rate, set at 15% for companies with profits below a certain threshold. These changes are designed to encourage business investment and promote economic growth, particularly among small and medium-sized enterprises (SMEs).
- Capital Allowances: The Act also includes provisions related to capital allowances, which allow businesses to deduct the cost of certain assets from their taxable profits. Key changes in this area include:
- Extension of the Annual Investment Allowance (AIA) to £1 million, providing businesses with increased tax relief on qualifying capital expenditure.
- Introduction of a new Super Deduction, allowing businesses to claim a 130% first-year capital allowance on qualifying plant and machinery investments. These measures are intended to incentivise businesses to invest in new equipment and technology, boosting productivity and competitiveness.
- Digital Services Tax: In line with global efforts to tax digital businesses more effectively, the Finance Act 2024 introduces a Digital Services Tax (DST) on revenues generated by certain digital businesses. The DST is aimed at ensuring that digital companies pay their fair share of tax in the countries where they operate.
- Anti-Avoidance Measures: To combat tax avoidance, the Act includes a range of anti-avoidance measures aimed at closing loopholes and preventing abusive tax arrangements. These measures are designed to ensure that all businesses pay their fair share of tax and comply with the spirit of the law.
The Finance Act 2024 came into force on the 22nd of February 2024 and applies to the United Kingdom.
Does the Finance act 2024 affect my business?
The Finance Act 2024 is expected to have a significant impact on businesses across the UK. Some of the key effects include:
- Increased Competitiveness: The reduction in the corporate tax rate and the introduction of new tax reliefs are expected to make the UK a more attractive destination for business investment.
- Encouragement of Innovation: The Super Deduction and other capital allowances are designed to incentivise businesses to invest in new technology and equipment, which could lead to increased innovation and productivity.
- Compliance Costs: While the Act aims to simplify the tax system, businesses may still face increased compliance costs due to the introduction of new tax rules and regulations.
- Digital Services Tax: Digital businesses operating in the UK will need to comply with the new DST rules, which could increase their tax liabilities.
The Finance Act 2024 represents a significant step towards reforming the UK’s tax system and promoting economic growth. By introducing measures to simplify the tax system, reduce tax burdens, and encourage investment, the Act aims to create a more competitive and business-friendly environment. However, businesses will need to carefully assess the implications of the Act on their operations and ensure compliance with the new rules and regulations.
Do I need the Finance Act 2024 in my ISO Compliance Register?
The Finance Act 2024 is likely to affect businesses of all sizes and across various sectors. However, some businesses may be more significantly impacted than others. These include:
- Small and Medium-sized Enterprises (SMEs): SMEs are likely to benefit from the reduction in the corporate tax rate and the increased AIA, which could help them invest and grow their businesses.
- Digital Businesses: Digital businesses operating in the UK will need to comply with the new DST rules, which could increase their tax liabilities.
- Manufacturing and Technology Companies: Companies in these sectors are likely to benefit from the Super Deduction and other capital allowances, as they often require significant investment in plant and machinery.
- Multinational Corporations: Multinational corporations operating in the UK will need to comply with the new tax rules, which could impact their tax planning strategies.
If your business is included above you will need the Finance Act 2024 in your ISO Compliance Register.
Legislation related to the Finance Act 2024
Legislation related to the Finance Act 2024 include:
- Criminal Finances Act 2017
- Finance Act 2021
- Finance Act 2022
- Finance Act 2023
More information
Visit the Finance Act 2024 article on the legislation.gov.uk website.
Create an account in the ISO Compliance Register App and add this article to your Register.
