The measure
Legislation will be introduced in the Finance Bill 2016 to reduce the main rate of corporation tax to 17% from 1 April 2020 (superseding the 18% rate effective from that date introduced in Finance (No.2) Act 2015.
Who will be affected?
UK companies and overseas companies operating in the UK through a permanent establishment.
When?
The 17% rate will be effective from 1 April 2020.
Our view
This further rate reduction should increase the attractiveness of the UK as a place for business.
It will also have an effect on the accounting for deferred tax assets and liabilities: groups will need to schedule when underlying temporary differences are expected to unwind, and measure deferred tax balances at the appropriate blended rate. Any impact of deferred tax re-measurement should be recorded when the legislation is substantively enacted for IFRS and UK GAAP purposes, and enacted for US GAAP purposes. Disclosure of the associated impact may be required in financial statements published before then.
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