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  • Barry Adams

Corporation Tax Changes

Updated: Mar 16, 2023


From 1st April 2023, Corporation Tax Rates are going to be changing.


Currently, the rate is 19% on all profits.


Following the changes, the rates will be as follows:

  • Profits up to £50,000 will be taxed at 19%

  • Profits over £250,000 will be taxed at 25%

  • Profits between £50K and £250K will be taxed at 19% up to £50K and then at 26.5% between £50K and £250K

So if you generate less than £50K profit, the 19% will still apply, and if you generate more than £250K, the new rate of 25% will be applied over the full amount.



Here is a quick overview of the tax liability for various amounts of profit between £50K and £250K, as well as the difference between what you will pay and what you would have paid under the current tax rate:

Profit

Tax liability 2023

Previous tax (19%)

Difference

£60K

£12,150

£11,400

+ £750

£70K

£14,800

£13,300

+ £1,500

£80K

£17,450

£15,200

+ £2,250

£90K

£20,100

£17,100

+ £3,000

£100K

£22,750

£19,000

+ £3,750

£125K

£29,375

£23,750

+ £5,625

£150K

£36,000

£28,500

+ £8,500

£175K

£42,625

£33,250

+ £9,375

£200K

£49,250

£38,000

+ £11,250


Note that where your accounting period covers this date, profits up to the 31st of March will be calculated at 19% and from the 1st of April at the new rates.


Profits are considered to arise evenly over the whole accounting period.


This brings into sharper focus keeping profits below £50,000.


There are a couple of tax-efficient ways in which profits can be reduced, such as:

  • Pension contributions up to £60,000 per individual

  • Purchasing an electric car


Please don't hesitate to contact us if you have the same shareholdings in multiple companies.

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