{"id":3920,"date":"2022-03-23T00:00:00","date_gmt":"2022-03-23T00:00:00","guid":{"rendered":"https:\/\/hebblethwaites.com\/index.php\/increase-in-corporation-tax-next-year\/"},"modified":"2022-03-23T00:00:00","modified_gmt":"2022-03-23T00:00:00","slug":"increase-in-corporation-tax-next-year","status":"publish","type":"post","link":"https:\/\/hebblethwaites.com\/index.php\/increase-in-corporation-tax-next-year\/","title":{"rendered":"Increase in corporation tax next year"},"content":{"rendered":"<p>In just over a year&rsquo;s time, from 1 April 2023, corporation tax rates are increasing.<\/p>\n<p>At present, companies pay tax on profits at a single rate of 19%, irrespective of the amounts of profits subject to corporation tax. From 1 April 2023, this elegantly simple process is about to change.<\/p>\n<p>From 1 April 2023:<\/p>\n<ul>\n<li>Companies will continue to pay tax at 19% if their taxable profits are below a lower profits limit of &pound;50,000. Accordingly, many smaller businesses will see no increase in their tax bills.<\/li>\n<li>Companies with taxable profits above &pound;250,000 will pay tax at the new mainstream rate of 25%.<\/li>\n<li>Companies with profits between &pound;50,000 and &pound;250,000 will pay tax at the 25% mainstream rate less marginal relief. Marginal relief smooths the impact of the 25% rate which will be adjusted to gradually increase from 19% to 25%.<\/li>\n<\/ul>\n<p><strong>Complications if a company is associated with other companies<\/strong><\/p>\n<p>Unfortunately, companies that have a number of associated companies will suffer a reduction in these &pound;50,000 and &pound;250,000 limits.<\/p>\n<p>The limits are divided by the number of associated companies plus 1. For example, if you have one associated company, the lower limit is reduced to &pound;25,000 and the upper limit to &pound;125,000 &ndash; the limits are divided by two. Likewise, if you have four associated companies, the limits are &pound;10,000 and &pound;50,000 &ndash; the limits are divided by five.<\/p>\n<p>A company is an associated company of another company if one of the two has control of the other or both are under the control of the same person or persons.<\/p>\n<p><strong>Reviewing company structures<\/strong><\/p>\n<p>You may want to review your company structures prior to 6 April 2023. For example, if you have one company with taxable profits of &pound;40,000 and one company with taxable profits of &pound;5,000, the company with the taxable profits of &pound;40,000 will not benefit from the small profits rate as the profits are above the lower limit of &pound;25,000 that applies to a company with one associate.<\/p>\n<p>Merging the companies will mean that there is only one company and the combined profits of &pound;45,000 will be charged at the small profits rate of 19%.<\/p>\n<p><strong>Time for a review?<\/strong><\/p>\n<p>If you have a number of associated companies, you may want to consider your options. Please call, we can help.<\/p>\n<!-- -->","protected":false},"excerpt":{"rendered":"<p>In just over a year&rsquo;s time, from 1 April 2023, corporation tax rates are increasing. At present, companies pay tax on profits at a single rate of 19%, irrespective of the amounts of profits subject to corporation tax. From 1 April 2023, this elegantly simple process is about to change. From 1 April 2023: Companies [&hellip;]<\/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-3920","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/posts\/3920","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=3920"}],"version-history":[{"count":0,"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/posts\/3920\/revisions"}],"wp:attachment":[{"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/media?parent=3920"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/categories?post=3920"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hebblethwaites.com\/index.php\/wp-json\/wp\/v2\/tags?post=3920"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}