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Rate changes due in 2023

Q: My client company is the holding company for a trading subsidiary. How will the changes to Corporation Tax rates in 2023 affect this group?

A: The main rate of Corporation Tax is to be increased to 25% from 1 April 2023. However, the small profits rate and marginal relief which used to feature in CY computations before 2015 is being reintroduced.

Companies with profits of £50,000 or less will pay CT at the small profits rate of 19%. Companies with profits in excess of £250,000 will pay at 25%. Marginal relief will give an effective tax rate of 26.5% on profits between £50,000 and £250,000, resulting in an overall rate of CT somewhere between 19% and 25%.