The 2023 Corporation Tax Increase

In the budget this year, Chancellor Rishi Sunak announced that there will eventually be an increase in corporation tax. It is set to rise from 19% to 25% from the 1st of April 2023. And despite this being a considerable increase from the perspective of many businesses. It still remains the lowest corporation tax rate in any of the G7 countries.

However, if your business has profits of less than ￡50,000, the current rate of 19% corporation tax will remain the same for your business. However, if it is above this, but below ￡250,000, you will be eligible for marginal relief.

And of course, many of us were expecting this increase to come following the unprecedented level of government spending to help the economy through the pandemic and the subsequent lockdowns. And it may be a relief to some that the increase isn't more imminent. The reason for this is that there was a concern from experts and the government that implementing an increase in corporation tax too early could slow down the economical recovery of the country.

The result of the hike in corporation tax is expected to bring over ￡11bn in extra revenue in the fiscal year 2023-24. Eventually rising to ￡17.2bn in 2025-26. Also from the 1st of April 2023, in conjunction with the corporation tax hike, the tax of diverted profits will also increase by 6% to 31%.

If you want to know more about corporation tax and how your business needs to adjust ahead of the increase in 2023 why not get in touch with a member of the team here at D&K Accounting. A team of experienced Profit-First professionals who have helped many businesses across the UK put their finances first.