Corporation tax cuts planned for the next four years will help property firms retain profits, it has been claimed.
The four per cent reduction in corporation tax to 2014 will enable
property investment profits to be maintained, it has been claimed.
However, the benefits of the reduction will be tempered by a reduction in the capital allowances rate, according to the British Property Federation (BPF), which is expected to hit real estate investment trusts particularly hard.
Corporation tax cuts from 28 per cent to 24 per cent over the next four years were announced by chancellor George Osborne in his emergency Budget, set to begin with a one per cent reduction from April 1st 2011.
The small profit rate will also be reduced from 21 per cent to 20 per cent rather than rising to 22 per cent as it would have done under Labour.
Commenting on the cuts, BPF director of finance Peter Cosmetatos outlined what this means for
commercial development.
He said: "The phased reduction in the main rate of corporation tax should allow most property businesses to retain additional profits for future reinvestment, and is therefore a positive development."
Forecasts published earlier this week by the Scottish Widows Investment Partnership indicated that the long-term prospects for the UK commercial property market are more favourable than that of equity or bonds.
Posted by Allan Flowers
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