Pre-Budget report 'may unveil changes to corporation tax'

News Article - 06 December 2006
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The chancellor Gordon Brown may put forward changes to corporation tax in today's pre-Budget report, it has been suggested.

According to advisors at audit and tax firm Deliotte, Mr Brown may indicate that the UK's tax regulations on the treatment of low-taxed subsidiaries of groups in the country are in breach of an EC treaty, the Telegraph reports.

Bill Dodwell, head of tax policy at Deloitte, told the publication: "UK corporation tax is at its highest-ever level, and there is substantial change to the business tax system and its administration."

He added that cases before the European Court of Justice could result in "major changes" being made to the approach taken by the UK to taxation of multinationals and overseas income.

It is also possible that the chancellor could indicate amendments to other financial matters, such as pensions, real estate investment trusts and environmental taxes.

Mr Dodwell told the newspaper that that capital allowance schemes for environmental spending could be extended or measures such as tax credits could be introduced.

In October, figures released by the Office for National Statistics showed that corporation tax receipts were strong, giving the chancellor his best October surplus in the last five years.

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