Legislative update: Chancellor confirms business tax road map

In this legislative update, the Chancellor has confirmed that a tax road map for business will be outlined at the Budget on 30 October and the sunset clauses of the Enterprise Investment Scheme (EIS) and Venture Capital Trust (VCT) scheme have officially been extended to 2035. A date has also been announced for the 2025/26 Scottish Budget. 

Business tax roadmap 

As part of its pre-election manifesto, the new government promised that a business tax roadmap for the duration of this parliament would be delivered in order to provide businesses with certainty over the coming years when planning investments. Although no specific timetable was provided in the manifesto, this was promised within the first six months.  

During recent Treasury questions, the Chancellor has now confirmed that an outline of this roadmap will be published at the Budget. This will include a commitment to cap corporation tax at 25 percent for the duration of the current parliament. Full expensing (100 percent first year allowances for new plant and machinery expenditure of companies) will also be retained. 

Given the Chancellor’s comments, it seems that what will be announced on Budget Day will only be an outline of the roadmap which is likely to be finalised thereafter in conjunction with wider stakeholder input. 

EIS and VCT scheme sunset clauses extended  

Finance Act 2024 extended the EIS and VCT scheme to shares issued on or before 5 April 2035. However, this was subject to domestic and international subsidy obligations being met. It is now confirmed that these formalities have been completed hence earlier this month The Finance Act 2024, Section 11 (Extension of Enterprise Investment Scheme Relief and Venture Capital Trusts Relief) (Appointed Day) Regulations 2024 were laid.  

This means that the sunset clauses are now officially extended from 6 April 2025 so that shares in a company (for EIS relief) or in a VCT that are issued before 6 April 2035 will qualify for relief, subject to the relevant conditions being met. 

Scottish Budget date  

Scotland’s 2025/26 Budget will be presented to the Scottish Parliament on 4 December 2024. This will set out the Scottish Government’s proposals for devolved taxes (such as the Land and Buildings Transactions Tax) and the income tax rates paid by Scottish taxpayers (other than on dividends and interest). It is also expected that the Scottish Government will publish its Tax Strategy on the same day which aims to set out the medium-term objectives for the Scottish tax system.