Corporation taxes

Tax rates

The Chancellor confirmed that the main corporation tax rate will reduce to 28% with effect from 1 April 2008. A rate of 30% will continue to be charged on ring-fenced profits.

Capital allowances

As announced in the 2007 Budget, from 1 April 2008 changes will apply to the capital allowances regime for companies. These include a phasing out of industrial buildings allowances, a reduction of allowances for plant and machinery to 20% and a new classification of features integral to a building with a writing down rate of 10%.

Measures have been announced to widen the availability of enhanced capital allowances for businesses investing in technology to reduce energy consumption, save water or improve water quality. Existing relief for expenditure on natural gas, biogas and hydrogen refuelling equipment will also be extended.

Legislation will be introduced in Finance Bill 2008 to extend 100% first year allowances for expenditure on cars with low CO₂ emissions.

As announced in the 2007 Budget, Finance Bill 2008 will introduce a payable tax credit for losses from expenditure on green technologies.

Research and development

Budget 2007 announced a package of business tax reforms which included an increase in the rate of R&D relief for all companies. Legislation will be introduced in FB 2008 to increase the rate of relief for large companies from 125% to 130% and for small and medium companies from 150% to 175% (capped at €7.5m). The proposals are subject to approval from the EC.