From April 2023 the main rate of Corporation Tax increased, rising from 19% to 25%. For any UK limited companies or Uk branches of foreign companies, you will be required to pay this tax on any corporate profits.
With these new corporation tax rates affecting UK businesses the team at Venton have looked into what these rates are, and what they will mean for businesses.
What Is Corporation Tax?
Uk based businesses are required to pay corporation tax based off of their yearly business profits. This applies to businesses that are either a limited company, a foreign company with a UK branch or for any clubs such as sports clubs.
In 2010 corporation tax was at an all time high at 28% and was reduced to 19% to incentivise people to invest in their businesses. However it is back on the rise now.
What Corporation Tax Changes are on the Horizon?
Changes to Corporate Tax have been implemented, coming into effect on the 1st. The main rate of corporation tax has increased to 25%, a 6% increase on the previous 19% tax rate. This increase will be based on company wide profits, with companies making a profit of £50,000 or less able to remain in the 19% tax bracket.
If your profits are over £250,000 then you can expect the 25% Corporation Tax to come into effect for your business. For any business with profits between £50,000 and £250,000 there will be a tapered tax rate.
What Do The New Corporation Tax Changes Mean For Small Businesses?
If your small business is a limited company you are still expected to pay corporation tax, however as the tax is based on your profits it is highly likely you will not have to pay the full 25% expected of companies making profits of £250,000 or more.
Small businesses that make a profit of £50,000 or below, your company will pay the “small profit's rate”, a 19% corporation tax bracket, providing some tax relief for those looking to grow their business and profit margins.
When originally instated corporation tax was nicknamed the ‘growth budget’ but with the tax rates rising by 6% depending on your business profits it may have an effect on businesses looking to expand. Avoiding an increase in tax can limit your business, making it difficult to grow, which is exactly what businesses look to do.
Keep Up To Date With Your Corporation Tax With Venton
Tax can be a daunting word, especially if you aren’t sure what any changes might mean for you and your business. At Venton our expert accountants are available to talk you through the process and are able to provide a range of accountancy services to help you with all aspects of your business accounts.
Contact Venton today with your queries about the new corporation tax rates.