Corporation Tax to rise in April 2023: what you need to know
The Prime Minister has announced that the Corporation Tax increase announced by the previous administration and then cancelled by the former Chancellor Kwasi Kwarteng will take place in April 2023.
What does the announcement mean?
Companies with profits of £250,000 or more
For companies with profits of £250,000 or more, the upper profits limit, the rate of Corporation Tax will rise from 19 per cent to 25 per cent.
Companies with profits of £50,000 or less
For companies with profits of £50,000 or less, the ‘lower profits limit’, Corporation Tax will continue to be charged at 19 per cent.
Companies with profits between £50,000 and £250,000
Companies with profits between £50,000 and £250,000 will receive marginal relief so that the rate of Corporation Tax will rise incrementally until it reaches 25 per cent.
Companies with accounting periods of less than 12 months
The upper and lower profits limits will be reduced accordingly for companies with accounting periods of less than 12 months.
Groups and associated companies
Companies within groups or with associated companies will also see reductions in the upper and lower profits limits.
What should I do now?
The announcement by the Prime Minister means that the Corporation Tax rises that had been scheduled for April 2023 will take place as originally planned.
If you had already planned for the tax rise and had not changed your planning since the mini-Budget in September, you can stick with your existing plans.
If you have not planned for a tax rise, you should consider how you spread investments in your business over the coming years to maximise your tax efficiency.
Tax planning is complicated and comes with a vast array of permutations. Speak to us today for professional advice.
Category: Blog By Kirk Newsholme Chartered Accountants in Leeds October 14, 2022
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