The Prime Minster, Liz Truss, has just announced that the planned reduction in Corporation Tax will no longer go ahead as stated in the mini-budget on 23 September 2022, and instead it will increase, as previously announced, from 19% to 25% with effect from 1 April 2023.
Taxable company profits under £50,000 will continue to be taxed at 19% when the changes take place in April, with this then increasing on a sliding scale until the main 25% rate takes effect for profits over £250,000, However, every £1 earned between the two thresholds will be taxed at a new marginal rate of 26.5%
Whilst not much of the mini-budget survives, the previous announcement that the Annual Investment Allowance (AIA) is being permanently extended to £1m is indeed confirmed so with the increased rate of Corporation Tax from April 2023, the identification and claiming of capital allowances is even more valuable.
As always, if you have any questions about tax changes and how they may impact you and your business, please contact Mark Pashley or another member of the Mercer & Hole team.
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