The Finance Act 2021 (FA 2021) outlined the largest single increase in corporation tax rates since the 1970s, increasing the main corporation tax rate from 1 April 2023 by around a third from 19% to 25%. FA 2021 also reintroduced a ‘small profits rate’ for companies with profits below £50,000, and a marginal rate for profits between £50,000 and £250,000. However, the small and marginal rates provide no shelter for investment companies that, from 1 April 2023, will pay corporation tax at the top 25% rate irrespective of their profits.
Should your company’s accounting period straddle the effective date of 1 April 2023, the corporation tax rate will be a blended rate for that year. For example, 23.5% for a company with a 31 December 2023 year end. This blended rate is the rate at which all profits of the accounting period will be taxed, including investment disposals, regardless of when, during the year they are sold.
There are some exceptions – find out more information about these and other details to keep in mind here. If you have a query about Corporation Tax rates, please contact us at firstname.lastname@example.org.