Understanding the Changes and Implications for Your Business

Welcome to our informative guide on the recent changes to Corporation Tax rates in the United Kingdom. In this article, we will delve into the details of the Corporation Tax increase from 19% to 25% and provide insights on how it may impact your business. Rest assured, we are here to support you through these changes and help you navigate the evolving tax landscape.


Understanding the Revised Corporation Tax Rates

Companies and unincorporated associations that pay Corporation Tax will likely be affected by the revised rates. Business owners must actively determine if these changes apply to their specific circumstances. The recent measure establishes a main rate of 19% for Corporation Tax starting on 1 April 2022. However, significant changes are looming.

From 1 April 2023, the Corporation Tax main rate for non-ring fenced profits will rise to 25% for profits exceeding £250,000. To support smaller businesses, a small profits rate (SPR) of 19% will be introduced for companies with profits of £50,000 or less. For companies with profits between £50,000 and £250,000, a marginal relief provision will gradually increase the effective Corporation Tax rate.


Policy Objective Behind the Changes

The revised Corporation Tax rates align with the government’s objective of generating revenue while maintaining the UK’s competitiveness in the global market. The aim is to strike a balance by excluding the least profitable businesses from a rate increase, promoting business growth and economic stability.


Preparing for the Changes

To effectively navigate the revised Corporation Tax rates, businesses should proactively make necessary adjustments. This includes updating internal software systems and understanding the eligibility criteria for the small profits rate or marginal relief claims. Our team of professional accountants can guide you through this process, ensuring compliance and minimizing any administrative burdens.


Corporation tax and its impact on Businesses

Approximately 2 million businesses, regardless of their current Corporation Tax liability, will experience a significant administrative impact due to the revised rates. It is crucial to familiarize yourself with the rate changes and determine the applicable rate for your business. Our team of experts can assist you in this process, ensuring compliance and minimizing administrative burdens.


Implications for Individuals and Families

The revised Corporation Tax rates indirectly affect individuals through their impact on businesses. It is essential to note that difficulties in paying the increased tax may have consequences for family dynamics. In such situations, HMRC offers Time To Pay arrangements to support businesses.


You are not alone!

Amid revised corporation tax rates introduced for UK businesses, we are committed to providing the guidance and support you need to adapt to these changes successfully. Contact us today to discuss how the revised rates specifically impact your business and to ensure that you are well-prepared for the evolving tax landscape. Together, we can navigate these changes and secure a prosperous future for your business.


Interested in more accounting topics? You can try also:

>> Self-Employed Accounting: Navigating Your Financial Success

>> Streamlining Workplace Pensions: A Guide for UK Business Owners


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