The corporation tax will increase to 25% from 1 April 2023, affecting companies with profits of £250,000 and over. The legislation that provided for this increase also sets out that small companies with profits up to £50,000 will continue to pay corporation tax at 19%, with profits between these two figures being subject to a tapered rate.
Frank Haskew, Head of Taxation Strategy at ICAEW, comments: “As the increase is already on the statute books, it is an easy change to effect as it does not require parliamentary approval.”
Finance Act 2021 also included an increase in diverted profits tax to 31% from 1 April 2023 to maintain its current six percentage point differential with the main corporation rate. A reduction in the bank corporation tax surcharge to 3% from 1 April 2023 was enacted in Finance Act 2022. ICAEW’s Tax Faculty awaits confirmation that these changes will also now proceed and not be reversed as previously announced at the mini-budget.
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