UK and International Tax news
Government Update On Corporation Tax
Monday 17th October 2022
The Government has announced that the main rate of corporation tax will increase to 25% from April 2023, as already legislated for, raising around £18bn a year and acting as a down payment on its full Medium Term Fiscal Plan.
The legislated increase in the corporation tax rate to 25% will apply to companies with profits of £250,000 or more. The small companies’ rate of 19% on profits up to £50,000 will continue to apply, and profits between these two figures will be subject to a tapered rate.
The 2021 Finance Act also included an increase in diverted profits tax to 31% from April 2023 in order to maintain its current 6% differential with the main corporation rate.
A reduction in the bank corporation tax surcharge to 3% from 1 April 2023 was enacted in the 2022 Finance Act.
The Government’s announcement reiterates that the UK’s corporate tax regime will remain competitive and supportive of growth at the 25% rate, and continue to be the lowest rate in the G7. As part of the forthcoming tax review, the government will look at how the tax system can go further to promote growth and investment.
The Chancellor Jeremy Hunt will set out the government’s Medium Term Fiscal Plan on 31 October, alongside a full forecast from the independent Office for Budget Responsibility, and provide detail on the action to get debt falling as a percentage of GDP over the medium term.
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