Tax Tip - Plan ahead for increase in corporation tax


Companies with taxable profits in excess of £50,000 will pay a higher rate of corporation tax from 1 April 2023.


From that date, the main rate of corporation tax is to rise to 25%. The main rate will apply to companies with taxable profits of more than £50,000. However, the effective rate is reduced by the availability of marginal relief where profits are between £50,000 and £250,000.


The effect of this is that companies with taxable profits of £50,000 will from 1 April 2023 continue to pay corporation tax at the rate of 19%. Where profits are between £50,000 and £250,000, the effective rate will be between 19% and 25%; the effective rate increases as profits increase. Companies with taxable profits of more than £250,000 will from 1 April 2023 pay corporation tax at a new main rate of 25%.


The limits are reduced proportionately where the company has associated companies, or where the accounting period is less than 12 months.


The rate of corporation tax will remain at 19% for the year starting on 1 April 2022.

We can help you understand what the increase in the rate will mean for your business, and help you plan ahead.