The major increase will help to pay for the cost of government support during the pandemic but the small profits rate will be kept at 19%.
Budget 2021: Corporation Tax up to 25%
Chancellor Rishi Sunak announced plans in his Budget today to raise Corporation Tax from 19% to 25% from 2023.
- The Treasury said that despite the increase in Corporation Tax to 25% it will remain the lowest rate in the G7.
- Chancellor Sunak also pointed out that the increase to 25% will not take effect until April 2023.
- Businesses with profits of £50,000 or less, around 70% of actively trading companies according to the Treasury, will continue to be taxed at 19%.
A tapered rate will also be introduced for profits above £50,000, so that only businesses with profits of £250,000 or greater will be taxed at the full 25% rate.
There was also news of measures to allow loss-making companies to recoup more of previous taxes paid.
Mr Sunak said companies who had been badly hit by the pandemic and lost money would have time to recover because his changes only affected profits.
Corporation tax rates
|Financial year 2020-21||Financial year 2021-22||Financial year 2022-23||Financial year 2023-24|
|Small profits rate||N/A||N/A||N/A||19%|