Business is general pay PAYE in respect of their employees, and VAT on turnover if they are required to be registered for that tax. Unincorporated business (Sole traders and partners ) pay income tax and NIC on their profits; companies pay corporation tax on all their profits including capital gains.

Capital allowances

The major categories of capital allowance in 2008/09 are:

Different rules for corporation tax

Certain categories of capital expenditure by companies are treated differently. New expenditure on “intangible assets”, including goodwill, know-how and patent rights, is in general relieved for tax according to the accounting treatment ( ie. depreciation)

There are increased allowance for companies which clean up contaminated land or carry out R&D work – the expenditure is uplifted for tax purposes, effectively creating a grant for doing the work. The uplift is 50% for land remediation and for small/medium company  R&D, and 25% for large company R&D. The R&D rates are to increase in 2008 once EU approval is granted.