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The UK’s main rate of corporation tax will increase from 19% to 25% with effect from 1 April 2023. This change was introduced by Finance Act 2021 and may have some important implications for companies and their owners.
Tax rate bands
From 1 April 2023 we will see the return of a small profits rate of corporation tax and marginal relief both of which were previously abolished on 1 April 2015. A small profits rate of 19% will be reintroduced for companies with annual chargeable profits of £50 000 or less meaning many smaller businesses many of which have sprung from the start-up boom during the coronavirus pandemic will be largely unaffected by the increase in the main rate.
Marginal relief will result in an effective rate of corporation tax of 26.5% on the slice of profits between £50 000 and £250 000 ensuring...
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