Corporation Tax Rises by 6% – Calculate Your Increase

The current tax rate is 19% and will remain at 19% until April 2023.

The corporation tax rate in April 2023 is set to increase to 25% for businesses with profits over £250,000.

From April 2023, there will be a small companies tax rate of 19% for profits under £50,000.

There will then be an effective rate of tax of 26.5% for profits between £50,001 and £250,000.

There is an effective tax rate of 26.5% to ensure that those with profits over £250,000 are taxed at 25%. This is illustrated below:

First £50,000 taxed at 19% gives a tax liability of £9,500
Next £200,000 taxed at 26.5% gives a tax liability of £53,000
The total tax charged on first £250,000 profits is £62,500 (which is a tax rate of 25%)

We anticipate that there will be anti-tax avoidance legislation including associated companies rules. These rules will be required to avoid say a £300k profit company, splitting up into 6 companies and declaring £50k profit at the lower tax rate.

Yes and No. The corporation tax increase was scrapped in the Mini Budget September 2022. However the tax increase was resinstated in October 2022 and confirmed in the Autumn Statement November 2022. As a result, the corporation tax increase is still going ahead from April 2023.