We are fifteen months away from a radical upward lift in corporation tax (CT) rates.<\/p>\n
From 1 April 2023, there will be two rates of CT:<\/p>\n
Marginal relief provisions will also be introduced such that, where a company’s profits fall between the lower and upper limits, it will be able to claim an amount of marginal relief that bridges the gap between the lower and upper limits providing a gradual increase in the CT rate.<\/p>\n
There will be further complications, and possibly increased tax bills, for companies associated with other companies and companies that fall under the definition of a close investment holding company.<\/p>\n
Deferring expenditure<\/strong><\/p>\n Companies that are planning for profits in excess of £50,000, after undertaking significant expenditure in the financial year beginning 1 April 2022, may be advised to consider deferring this expenditure until their trading period beginning 1 April 2023. In this way, they may reduce liability for 2023-24 taxable at 25% or at marginal rates and increase CT payments for 2022-23 at 19%.<\/p>\n Accelerating income<\/strong><\/p>\n If commercially possible, companies could plan to bring forward income from 2023-24 to 2022-23.<\/p>\n As with deferring expenditure, this would reduce CT at potentially higher rates in the later year.<\/p>\n Utilising tax losses<\/strong><\/p>\n Similar care will need to be taken when considering the surrender of tax losses. Should they be used during 2022-23 and provide much needed cash-flow benefits or deferred and utilised from 2023-24 when CT could potentially be reduced at higher rates?<\/p>\n Timing issues<\/strong><\/p>\n Clearly, many companies will not be in a position to defer expenditure or bring forward income as they will not have taxable profits above the £50,000 small profits limit. Also, they may not be willing to increase CT payments for 2022-23 even though CT payments for 2023-24 could be reduced by a higher amount.<\/p>\n As with all tax changes there will be complications, grey areas that need to be considered. But the transition to higher rates of CT will offer one-off opportunities for certain companies to save tax.<\/p>\n","protected":false},"excerpt":{"rendered":" We are fifteen months away from a radical upward lift in corporation tax (CT) rates. From 1 April 2023, there will be two rates of CT: A small profits rate which will stay at the present 19% and will apply to companies with profits up to £50,000. An increased main rate, which will be set […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[1],"tags":[],"class_list":["post-3877","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/posts\/3877","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/comments?post=3877"}],"version-history":[{"count":0,"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/posts\/3877\/revisions"}],"wp:attachment":[{"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/media?parent=3877"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/categories?post=3877"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/tags?post=3877"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}