We set out below a summary of key items of interest announced by the UK’s Chancellor in the Budget on 19 March 2014 relating to businesses, corporate and finance taxation and real estate taxation.  Much of what was announced had already been trailed in the 2013 Autumn Statement and is not repeated below.


  • The government remains committed to reducing the main UK corporation tax rate (currently 23 percent) to 21 percent from April this year and 20 percent from April 2015.  The small profits rate remains at 20 percent.


  • The annual investment (AIA) allowance gives a 100 percent allowance for qualifying expenditure on plant and machinery, subject to an annual cap of £250,000.  The cap is to be doubled to £500,000 with effect from April this year and the availability of the AIA extended until the end of 2015.
  • The government introduced the Seed Enterprise Investment Scheme (SEIS) on a temporary basis two years ago.  The SEIS aims to attract equity investment in startups by providing income tax and capital gains tax reliefs for SEIS investors.  The government is now making the SEIS permanent and intends to explore extending it to investments in convertible loans (currently only shares qualify).
  • The government will increase the rate of the "payable" R&D tax credit to loss-making small and medium sized enterprises from 11 percent to 14.5 percent from April this year.  This is intended to provide support for innovative startups and early stage businesses that wish to invest in R&D.
  • An enhanced 100 percent capital allowance is currently available for companies investing in plant or machinery for use primarily in certain designated "enterprise zones."  These enhanced allowances were due to expire on 31 March 2017; the government is now extending their availability until 31 March 2020.



  • At present, the purchase of a residential property into a company (or into another “non-natural person”) will attract a 15 percent rate of SDLT if the residence is worth more than £2M.  The entity holding the property would also have to pay the annual tax on enveloped dwellings (or ATED) and CGT on any sale of the property
  • Legislation will be introduced so that with effect from 20 March 2014, this SDLT charge applies to residences worth more than £500,000.  The ATED charge will be extended so as to apply from April 2015 to properties worth more than £1M and from April 2016 to properties worth more than £500,000.  The CGT charge will also apply to such properties from the those dates


As announced in 2013, the Government intends to introduce legislation to "clarify the scope" of BPRA.  The key objective appears to be to ensure that the allowances are limited to building and renovation works and associated services.  However, following consultation: 

  • the period of time during which works must be carried out (following a pre-payment) will be extended to 36 months
  • the period in which balancing adjustments must be made if certain events occur will be reduced from 7 to 5 years


Enhanced capital allowances for expenditure in designated enterprise zones was introduced in 2012.  This initially ran for a 5-year period.  However, the period has now been extended for a further 3 years, ending in March 2020


The budget has also provided a list of future tax changes that are being considered by the government.  These include: 

  • A re-statement of the government's intention to apply UK capital gains tax to the disposal of UK residential property by non-UK resident persons.  At present, no such tax applies.

    • A consultation on the application of SDLT to the 'seeding' of property authorized investment funds and, more generally, in relation to co-ownership authorized contractual schemes.


  • The government is pressing ahead with certain changes to the bank levy announced in the 2013 Autumn Statement that take effect from January 2014.  These include increasing the full rate of the bank levy to 0.156 percent, aligning the bank levy definition of Tier One capital with the Capital Requirements Directive and excluding liabilities in respect of collateral  that has been passed on to a central counterparty.
  • The government also intends to consult on a new mechanism for charging the bank levy, where banks are allocated into different bands according to their chargeable equity and liabilities and then charged a set amount for the band.  Any resulting changes to the bank levy would take effect from 2015.


  • Following a review of the loan relationships and derivative contracts legislation in 2013, the government will enact measures in two areas, both with effect from 1 April 2014:
  • the de-grouping charge that arises when a loan or derivative contract is transferred to a group company that is subsequently "de-grouped" shall apply to both profits and losses (currently losses are not brought into account) and

existing anti-avoidance rules that apply to the taxation of certain collective investment vehicles will be clarified and enhanced. 

  • The government is now planning to defer legislation to clarify the treatment of loan relationships and derivative contracts held by partnerships until 2015.


  • Following a consultation that closed last month, the government will introduce legislation to permit HMRC to issue "follower notices" to users of certain tax avoidance schemes requiring them to make an up-front payment of any tax in dispute.  This will apply to users of schemes defeated in the courts, schemes that fall within the disclosure of tax avoidance schemes (DOTAS) rules and schemes that HMRC counteracts under the general anti-abuse rule (GAAR). 
  • The government is to introduce legislation to exclude R&D tax credits from the existing rules which are designed to prevent corporate loss buying.
  • Unsurprisingly, the government also intends to enact a range of targeted anti-avoidance rules to counteract specific areas of perceived avoidance, including:
    • preventing claims for capital gains roll-over relief where the proceeds from disposal of a capital asset are re-invested in an intangible asset (broadly, "fixed" goodwill and intellectual property assets)
    • closing down a scheme using total return swaps which enabled companies to pay their profits to another group company located overseas and therefore outside the charge to UK tax an
    • strengthening an existing rule related to the contrived use of capital losses to reduce income profits to ensure that the rule applies to a reduction of income profits by whatever means.