Relevant to those sitting ATX-UK in June, September or December 2024 or March 2025
This article covers the changes made by the Finance Act 2023 (which is the legislation as it relates to the tax year 2023/24).
It should be read by those of you who are sitting the ATX-UK exam in the period from 1 June 2024 to 31 March 2025.
The Finance (No. 2) Act 2023 did not receive Royal Assent by the exam cut-off date of 31 May 2023, and is therefore not examinable as regards exams falling in the period 1 June 2024 to 31 March 2025.
Please note that if you are sitting ATX-UK in the period 1 June 2023 to 31 March 2024, you will be examined on the Finance Act 2022, which is the legislation as it relates to the tax year 2022/23. Accordingly, this article is not relevant to you, and you should instead refer to the Finance Act 2022 article published on the ACCA website.
All of the changes set out in the TX-UK article (see ‘Related links’) are also relevant to ATX-UK. In addition, all of the exclusions set out in the TX-UK article apply equally to ATX-UK unless they are referred to below.
This article does not refer to any amendments to the ATX-UK syllabus coverage unless they directly relate to legislative changes and candidates should therefore consult the ATX-UK Syllabus and Study Guide for the period 1 June 2024 to 31 March 2024 for details of such amendments.
You are reminded that none of the current or impending devolved taxes for Scotland, Wales, and Ireland are, or will be, examinable.
On the ACCA website, there are several non-technical resources relevant to ATX-UK which you should refer to.
Research and development (R&D) expenditure
Small or medium-sized companies which incur qualifying expenditure on R&D are entitled to an additional tax deduction. This additional deduction has been reduced from 130% to 86% of the qualifying costs incurred, resulting in a total tax deduction of 186% of the qualifying costs.
Where this deduction results in a trading loss, the company may surrender the loss in return for a payment from HM Revenue and Customs (HMRC). This payment has been reduced from 14.5% to 10% of the amount surrendered.
The following changes are explained in detail in the TX-UK article.
The notes set out below highlight the fundamental issues arising from the changes, but you will also need to read the detail in the TX-UK article.
Basis of assessment for unincorporated businesses
In summary, for exams in the period 1 June 2024 to 31 March 2025:
Enhanced capital allowances for companies
Rates of corporation tax
For the financial years 2021 and 2022, the rate of corporation tax was 19%, regardless of the level of a company’s profits.
For the financial year 2023 (the year ended 31 March 2024) the rates of corporation tax are:
It is very important that you go through the detail of this in the TX-UK article and, in particular, that you understand the way in which the lower and upper limits are reduced for both short accounting periods and by reference to the number of associated companies.
The effect of having the two rates of corporation tax together with marginal relief, is that the tax saving resulting from the relief of losses will be maximised if, where possible, losses are targeted to relieve the following profits:
Relieve profits | Rate of relief | |
---|---|---|
Between the limits | 26.5% | |
Down to the level of the upper limit | 25% | |
Below the lower limit | 19% |
When advising on the offset of losses there are two fundamental issues:
When considering these two issues you should recognise that:
In the ATX-UK exam you should be prepared for a range of group scenarios, for example:
Quarterly instalment payments
A company is required to make quarterly instalment payments in respect of its corporation tax liability if its augmented profits exceed the profit threshold of £1,500,000. This threshold must be divided by the number of associated companies as at the end of the immediately preceding accounting period.
Although TX-UK candidates will be told the number of associated companies in a question involving quarterly instalment payments, ATX-UK candidates will be expected to be able to determine the number of associated companies for the purposes of payment of tax by quarterly instalments.
The following technical articles will be published on the ACCA website at a later date:
The following exam technique articles will also be published on the ACCA website at a later date:
Written by a member of the ATX-UK examining team