Changes In UK Corporation Tax

Changes In UK Corporation Tax - Northwood Accountancy

Changes In UK Corporation Tax

The changes in the UK Corporation Tax are only going to affect unincorporated associations and companies paying Corporation Tax. These measures have placed the main rate at nineteen percent and are expected to go into effect on 1st April 2022. Additionally, the charge to Corporation Tax has been set to begin on 1st April 2023. In this article, we discuss how the recent changes in UK Corporation Tax will affect businesses and the new rates they will need to pay.

According to these measures, the CT main rate for all non-ring-fenced profits is set to increase to twenty-five percent. The rate will apply to earnings of over $250,000. Companies whose profits are $50,000 or less will be required to pay an SPR (small profits rate) set at nineteen percent.

Companies whose profits are within $50,000 and $250,000 will start paying Corporation Tax at the main rate. However, this rate may be reduced by a marginal relief provided there is a slow increase in the working Corporation Tax rate. The introduction of these measures is intended to support an objective arrived at by the government, aimed at helping it raise more revenue.

The government intends to increase the amounts raised each financial year while ensuring that the Corporation Tax in the UK remains competitive to that of major economies in the world. The architects of this measure are hopeful that this can be done without instituting a tax increase on the least profitable businesses. They are measures arrived at when preparing Budget 2020 when it was announced that CT main rate would remain at nineteen percent for the coming two years.

These new measures will have a significant impact on businesses, including civil society organizations. It is estimated that up to two million companies will be affected, and their managers will need to learn of these changes, even if they are not affected. Around one and a half million businesses will continue to pay Corporation Tax at a rate of nineteen percent, while others will be exempted from this rate.