HM Treasury recently produced a Business tax road map which was essentially a blueprint for future tax policy intended to outline measures to support business; but what impact will it have on the Top 100 and other businesses in our region?
Click here to view the 2016 Top 100.
In my experience, innovation is the key to success; a theme echoed throughout the document which aims to encourage entrepreneurship and innovation through lower rates of corporation tax and additional tax breaks for the most innovative of companies.
Many of the more successful businesses that I meet undertake innovative activities but it is surprising that recent statistics suggest only 90% of companies currently take advantage of these Government back reliefs. Our top 100 survey indicates that those companies who continue to invest in innovation and knowledge will see this translated into consistently higher levels of turnover and profitability over the longer term. These businesses drive the local economy forward and it is vital they make the most of their ideas and associated intellectual property (IP) to ensure continued growth and development.
In recent years, the Government has continued to enhance tax breaks for innovation, such as Research & Development (R&D) and Patent Box Tax Reliefs, specifically aimed at providing companies with tax incentives to innovate.
The rate of corporation tax is due to be cut to 17% by 2020. This is great news for the Top 100, who between them achieved pre-tax profits of over £450 million. HM Treasury statistics show a strong correlation between falling corporation tax rates and increased business investment so hopefully the region will benefit accordingly.
We also find that companies that innovate and perhaps have patents and other IP tend to be the ones that are more attractive to buyers, staff, investors and customers. This in turn often translates into success and reward for the owners and staff of those companies.
Shareholders are still able to pay just 10% capital gains tax on a sale of a trading company. This, coupled with the low business tax regime above means that the tax system is being moulded to encourage people to invest in growing their business to create jobs, exports and wealth and we look forward to seeing what impact this has on our region in years to come.
Scott Burkinshaw
Scott is Tax Partner at Shorts, specialising in providing strategic corporate and personal tax advice.
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