Corporation tax reforms

The planned corporation tax reforms are going ahead. From 1 April 2023, the rate of corporation tax that you pay will depend on the amount of your taxable profits.

If you are a standalone company with profits of more than £250,000 you will pay corporation tax at a rate of 25% from 6 April 2023. A small profits rate of 19% applies where the profits of a standalone company are £50,000 or less. Where profits are between £50,000 and £250,000, the effective rate is between 19% and 25%. In this band, corporation tax is payable at the rate of 25% as reduced by marginal relief.

If your company has associated companies, the £50,000 and £250,000 limits are divided by the number of associated companies plus 1. The limits are also proportionately reduced where the accounting period is less than 12 months.

If your accounting period straddles 1 April 2023, you will need to apportion your profits and work out the corporation tax separately for the period before 1 April 2023 and the period on or after 1 April 2023.