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Change to corporation tax rate for some companies


WHAT ARE THE CHANGES FROM APRIL 2023?


From 1 April 2023, the main rate of corporation tax rises to 25%. Not every company will pay at this rate, however.

Profits exceeding £250,000* will be charged at the main rate, but a small profits rate of 19% applies where profits do not exceed £50,000*. Companies with profits under this level, therefore, effectively see no change.


For companies with profits between £50,000* and £250,000*, the tax rate is tapered. These companies pay at the main rate reduced by marginal relief: essentially, the tax rate increases from 19% to 25% depending on the level of profits.


*Limits are adjusted where there are associated companies.


HMRC has created an online tool to demonstrate how marginal relief works.



HOW CAN YOU PLAN FOR THE CHANGES?


Director-shareholders in companies with higher levels of profits are likely to need to plan for the cash flow implications of higher corporation tax bills.


HMRC:


For more information from HMRC on please visit the link below:




This summary is published for the information of clients. It provides only an overview of the main points, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this summary can be accepted by the authors or the firm.

 

BWBCA Limited

Dukes Court

Duke Street

Woking

Surrey

GU21 5BH

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