Corporation Tax rates are going up as of April 2023. The UK government has announced an increase in the main Corporation Tax rate to 25% for companies with profits over £250,000, starting from April 1, 2023. The Small Profits Rate (SPR) of 19% will be introduced for companies with profits up to £50,000.
For companies with profits between £50,000 and £250,000, a marginal rate of Corporation Tax will be applied to bridge the gap between the lower and upper rates. This marginal rate will gradually increase from 19% as profits exceed £50,000, ultimately reaching 25% for profits over £250,000.
To determine the amount of Corporation Tax payable, taxable profits and gains are multiplied by the main rate of 25% and adjusted for marginal relief. The marginal relief fraction for the fiscal year 2023 has been set at 3/200. For companies looking to calculate their eligibility for marginal relief, HMRC provides an online calculator available at www.tax.service.gov.uk/marginal-relief-calculator.
Next Steps
If you have a limited company and will be affected by the changes detailed here, we advise you take immediate action to find out what the increased rates mean for you and your business. In some cases, it may also be prudent to reconsider associated company relationships before April 2023. This will help avoid partial loss of the lower 19% rate or marginal tapering relief.
At EBS Accountants, we are experts in providing accounting and taxation services to businesses across the UK.
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