In the Spring Budget 2021, Chancellor Rishi Sunak announced that the UK’s main rate would increase to 25% (for profits over £250,000) from April 2023, at the same time as a separate small-profits rate of 19% (for profits of £50,000 or under).
However, it wasn’t all bad news for companies in last month’s Budget, as the Chancellor announced a new ‘super-deduction’ in an attempt to encourage investment. Between 1 April 2021 and 31 March 2023, companies that invest in qualifying new plant and machinery assets will benefit from a 130% first-year allowance. This will allow them to effectively cut their tax bill by up to 25p for every £1 they invest.
Another developing policy change is the Government’s focus on modernising the tax system, through its Making Tax Digital (MTD) programme. The first mandatory stage of this began with VAT-registered businesses with a turnover above £85,000 from April 2019, and it’s now set to rollout to certain self-assessment taxpayers in 2023, then eventually to corporation tax by as early as 2026.
Essentially, the scheme will require all companies or other entities within the charge to corporation tax to maintain digital records, and use MTD-compatible software to provide quarterly summary updates of their income and expenditure to HMRC.
Read our article here to find out what’s ahead for companies or get in touch with us for corporation tax advice.