Corporation tax planned increase
The increase to 25% will go ahead in April 2023
We are sharing this update from ACCA, our professional body, for the interest of clients and contacts. The content is (c) ACCA
From April 2023, the planned increase in the corporation tax rate to 25% for companies with over £250,000 in profits will go ahead.
Small companies with profits up to £50,000 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.
The thresholds that apply for determining whether a company is chargeable at the small ring fence profits rate will be aligned with these limits.
In line with the approach taken with the former rules, the small profits rate will not apply to close investment-holding companies.
The lower and upper limits will be proportionately reduced for short accounting periods and where there are associated companies.
The related 51% group company test will be repealed and replaced by associated company rules. This will be the case for its application for determining whether a company is large or very large for quarterly instalment payment purposes or for determining whether a company may elect to use the small claims treatment for the patent box, and so on.
Broadly, a company is associated with another company at a particular time if, at that time or at any other time within the preceding 12 months:
- one company has control of the other
- both companies are under the control of the same person or group of persons.