Following Prime Minister Liz Truss’s announcement this afternoon that she will abandon plans to scrap the Corporation Tax rate rise, here’s a reminder of what was originally announced by Rishi Sunak in March 2022:
- The Corporation Tax rate will increase from 19% to 25% for the financial year beginning on 1 April 2023.
- If a company’s accounting period straddles more than one financial year, the amount of profits for that accounting period must be apportioned to arrive at the tax rate charged.
- A small profits rate will be introduced for qualifying companies with no associated companies in the accounting period and profits of £50,000 or less so that they will continue to pay Corporation Tax at 19%.
- Companies with profits between £50,000 and £250,000 will pay tax at the main rate reduced by a marginal relief providing a gradual increase in the effective Corporation Tax rate.
