INCREASE IN CORPORATION TAX
The Chancellor’s Autumn Statement confirmed that an increase in Corporation Tax will be effective from 1 April 2023.
WHAT ARE THE NEW CORPORATION TAX RATES?
The main rate of Corporation Tax will increase from 19% to 25% for companies with profits of £250,000 or more.
A small profits rate of 19% will still exist for companies whose profits are £50,000 or less.
For profits between £50,000 – £250,000, companies will be charged at a marginal rate of 26.5% so that once profits reach £250,000, the flat rate of 25% applies to all profits.
BE AWARE OF CORPORATION TAX RATES FOR ASSOCIATED COMPANIES
As of 1 April 2023 the “Associated Companies” rule also comes into effect.
This means that if two or more companies are associated in some way, then the new £50,000 and £250,000 thresholds are divided by the number of companies concerned.
A company is generally classed as an “Associated Company” if one of the two has control of the other, or both are under the control of the same person or group of persons.
In order to establish control, you will need to consider both direct holdings by an individual, and indirect shareholding by looking at the individual’s associates – such as those companies controlled by one’s spouse.
There are some complexities and exceptions to all of the above, so please do get in touch with our Corporation Tax experts James Ellin and Leanne Hickman if you would like further information.
Chloe Walker – Accountant
Janet Rochford – Marketing Manager