The introduction of a new small profits rate for corporation tax from 2023 will increase complexity, according to the Association of Taxation Technicians (ATT).
In the Spring Budget 2021, Chancellor Rishi Sunak announced the main corporation tax rate will increase from 19% to 25% for firms with profits over £250,000.
A new small profits rate of 19% will be introduced for businesses with profits up to £50,000.
Jeremy Coker, president of the ATT, said although the small profits rate will protect smaller firms from the increase in corporation tax, it will add further complexity.
He said as a result of marginal relief, business with profits which fall between the £50,000 and £250,000 relief band could also be subjected to a higher tax rate of around 26.5%.
Coker added:
“Introducing marginal relief removes an otherwise unwelcome cliff-edge effect which would otherwise mean that a small increase in profits would make corporation tax rates shoot up.
“But we know from past experience that marginal relief calculations can be complicated, and make estimating future tax bills tricky.
“The reintroduction of the small profits rate may therefore be welcome by the smallest companies, but might cause headaches for those whose profits lie in the middle ground.”
Speak to us about your corporation tax.
ATT: Corporation tax rise will increase complexity
Make the switch to us
Choosing StationOne means opting for a service where excellence, expertise, and a personal touch converge. Our rates reflect the quality and dedication we bring to every interaction. We are not just about the numbers; we're about fostering growth, ensuring compliance, and paving the way for your business's prosperity.
Get in touch
Fancy a new accountant? Contact us for tailored financial guidance.
Tell us about your business
Share your business needs; we'll provide the bespoke financial solutions.
We'll take it from here
Trust us to lead your financial operations to success.
"Enables us to be more profitable"
"Having been a client for many years we have learned how important Food and Drink GP’s are to the running of our restaurants and getting these to the correct %’s every week enables us to be more profitable and then be able to concentrate on managing other costs"
How can we be of service?
Embark on your journey towards financial excellence with StationOne. Let us show you what it means to have not just an accountant, but a committed partner in your corner.