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Britain's got (taxation) talent

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Britain's got (taxation) talent - the UK is at its most competitive

Fear not, the title of this article isn’t an attempt to convince you that tax is in fact a form of light entertainment.  Rather it is a commentary on the UK government’s avowed intention to create the most competitive corporate tax regime in the G20.

In pursuit of this goal we have a main rate of corporation tax that is scheduled to fall to 20% by 1 April 2015.  In a European context, this leaves France and Germany trailing in our wake and moves directly onto the ground occupied by traditional low tax jurisdictions such as Switzerland, Luxembourg and Ireland.

The UK has never imposed withholding tax on outbound dividends, and since 2009, the vast majority of inbound dividends can also be received in a tax neutral manner.  R&D tax credits have been improved such that Small and Medium Sized Entities (SME) now receive a 225% tax deduction for qualifying expenditure, and this relief has been joined by a Patent Box regime that will deliver an effective 10% rate of corporation tax for patent related profits.

The creative industries have not been forgotten, with a suite of special reliefs for film production, high end television and video games.  Indeed the very generosity of the UK approach has raised the hackles of our European partners to such an extent that both the video games relief and the Patent Box regime are currently under investigation by the European Commission.

We have an effective participation exemption in the form of the Substantial Shareholdings Exemption (SSE), and the stripped down anti-avoidance provisions of the reformed Controlled Foreign Company (CFC) provisions are now difficult to fall foul of unwittingly.  Even the “supertax” rate of 50% has now been scaled back to 45%.

We have yet to see a special tax relief for cuddly toys, but even so “didn’t they do well!”

Of course it is important to recognise that tax isn’t everything.  A difficult admission perhaps for those of us immersed in it on a daily basis; but a healthy one nonetheless.  Outside the tax sphere, however, the UK has a strong story to tell.  There is political stability, an educated workforce, flexible labour markets, a world leading financial centre and the English language.

To quote Mark Carney, the recently appointed Governor of the Bank of England, UK economic policy can be summed up in “five simple words…we are open for business”.