The most recent update from the Chancellor stated that although there will be a rise in tax, it will not be immediately. Why? Because all tax rates apart from VAT have been frozen for 2021 and 2022.

What Are The Changes In Corporation Tax?

From the 1st April 2023, larger businesses can expect to see their corporation tax increase from 19% to 25%. Organisations that do not make an annual profit of more than £50,000, on the other hand, will continue to pay the current rate of 19%. Put in place will be a system of marginal relief, which will affect corporate profits between £50,000 and £250,000, above which will have a 25% rate.

For groups and associated companies, complexity will be added. This is because the profit thresholds mentioned above will have to be divided by how many associated companies there are. To be classed as a group or associated, all of the companies must be under the control of the same person, business or group. If you own a family company but are not trading, you will still need to pay the 25% corporation tax on all profits.

To begin calculating the more efficient way to structure your group and extract profits, please do not hesitate to get in touch. We can work with you to determine the best solution to implement for your company in April 2023.