Corporation Tax Increase Back on the cards from 1 April 2023
Following another tumultuous day for the Truss government, it has been confirmed that the Chancellor of the Exchequer is now Jeremy Hunt and the corporation tax increase which was previously scrapped on 23 September 2022 is now to go ahead, after all.
The corporation tax increase will raise £18 billion in extra tax revenue for the government and the move has been necessary to calm the financial markets in the light of concerns over unfunded tax cuts announced by the government in it’s now infamous mini-budget.
This means that the main rate of corporation tax will increase to 25% on 1 April 2023 for companies with taxable profits in excess of £250,000 a year. A small profits rate (SPR) will also be introduced for companies with profits of £50,000 or less so that they will continue to pay corporation tax at 19%. Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective corporation tax rate applied to their profits. The marginal rate of tax on profits arising in the band £50,001 to £249,999 will therefore be 26.5%