Corporation tax to rise to 25% in 2023

The Chancellor announced that taxes would have to rise, but not quite yet, as all tax rates except for VAT are frozen for 2021-22.

Large companies will then see their corporation tax rate rise from 19% to 25% from 1 April 2023. Companies making no more than £50,000 per year in profits will still pay tax at the current rate of 19%. There will be a system of marginal relief on corporate profits between £50,000 and £250,000, above which the tax rate will be set at 25%.

Complexity is added for groups and associated companies as the profit thresholds of £50,000 and £250,000 will have to be divided by the number of associated companies. The companies counted as being in a group or associated will be those which are under the common control of a person, a company or a group of persons.

Family companies which are not trading will also pay corporation tax at 25% on all profits.

We can work with you to calculate the most tax efficient way to structure your group and extract profits from your company from April 2023.

Budget 2021 – Business Taxes