Be prepared for the Corporation Tax rise

Need advice? We can help.Get in touch today

In March 2021, when Rishi Sunak was Chancellor, the Corporation Tax rise was first announced. After some confusion that arose from the mini-budget, Jeremy Hunt has since confirmed that this rise will still take place in April 2023.

What is Corporation Tax and who does it apply to?

All UK companies must pay Corporation Tax on the profits they generate. The amount your company must pay is determined by the level of profits made in the fiscal tax year. Non-incorporated businesses, including sole traders and partnerships are subject to Self-Assessment Tax and therefore, this rise will not affect them.

What are the changes?

From the 1 April 2023, the rate at which Corporation Tax is charged will increase to 25% for companies whose taxable profits exceed £250,000.

For companies whose profits are less than £50,000, the current rate of 19% will still apply.

For profits that sit between these thresholds, the tax you pay will be determined by a new Marginal Small Companies Relief system.

These limits will be proportionately reduced for short accounting periods and associated companies.

What actions should you consider?

Should your company plan to dispose of chargeable assets, it could be beneficial to do so before the increase, so that the tax rate levied is at the current 19%.

In addition, delaying planned expenditure where appropriate, could be advantageous if relief is obtained at the new higher rate.

More than ever, effective tax planning is important to navigate these changes. If you have any questions about this, please get in touch; Burton Sweet are here to help…

Useful information for Be prepared for the Corporation Tax rise

IndividualsLimited CompaniesSole Traders & Partnerships

Read our summary of the Spring Budget 2024, with changes to National Insurance, Child Benefit and second homes…

Read more
Limited Companies

A summary of some of the key changes from the Economic Crime and Corporate Transparency Act and how these might affect you and your company…

Read more
Limited CompaniesSole Traders & Partnerships

Conducting year-end work can be difficult to prioritise. Read through our ten strategies that can make your year-end process a more seamless.

Read more
IndividualsSole Traders & Partnerships

From January 2025, digital platforms such as eBay, Airbnb, Etsy and Vinted will have to routinely collect and report sellers’ income to HMRC.

Read more

I am a...