The corporate tax rate is set to increase from 19% to 25% in April 2023.

Use our calculator below to see how you may be impacted:

Quick history of this change:

  • The April 2023 Corporation Tax rise was first announced in March 2021.
  • However, in the 23rd September 2022 ‘mini Budget’, Kwasi Kwarteng announced it was to be scrapped altogether.
  • On 14th October 2022, a U-turn was announced and it was confirmed that the Corporation Tax rise would go ahead – as originally planned.
  • Rumours it may still be scrapped again proved to be false in the Spring budget of 15 March 2023

The new Corporation Tax rates:

The main rate of CT will rise from 19% to 25%.
However, smaller companies will not have to pay the full rate as profits below £50,000 will continue to be taxed at 19%.
Profits between £50,000 and £250,000 will attract a marginal rate and the full 25% will only apply to companies with profits of £250,000 or more.

Be careful of associated companies:

The lower and upper limits will be proportionately reduced when there are associated companies.

For example, if you have 2 associated companies, the thresholds will be reduced to £25,000 and £125,000.

A company is an ‘associated company’ of another company if one of the two has control of the other, or both are under the control of the same person or persons.
There are a number of exclusions, for example a dormant company would be excluded from the associated company rules.

You can read more about these rules here : HMRC Company Taxation Manual