From April 2023, the Corporation Tax rate will increase for companies with profits exceeding £50,000, as announced at Spring Budget 2021.

However, the exact rate that a company is required to pay Corporation Tax at will be determined by their profits.

Companies generating profits of £250,000 or more will see their Corporation Tax rate rise from 19 per cent, to 25 per cent. Those with profits falling below £50,000 will continue to pay 19 per cent under the ‘Small Profits Rate’ (SPR).

Meanwhile, those with profits between £50,000 and £250,000 will pay Corporation Tax at an effective rate of 26.5% on their profits above the £50,000 up to the £250,000 level. The way this is technically achieved is through a ‘marginal relief’ calculation which reduces the 25% rate down.


A company has taxable profits of £100,000.

The company pays Corporation Tax on the first £50,000 at 19% and on the remaining £50,000 at 26.5% which totals £22,750.

The new Corporation Tax thresholds are adjusted for companies with accounting periods shorter or longer than 12 months, and where a company has associated companies.

Complexities and opportunities for tax planning

The reforms return us to where we were a few years ago and, without doubt, require careful calculations dictated by your company’s financials.

Taking into account the fact that the rate of tax payable will be linked to business profits, new opportunities for tax planning, to minimise liabilities, will likely present themselves.

However, it’s vital that any tax-efficient strategies are in place well in advance of the new Corporation Tax rates taking effect.

How can George Hay help?

At George Hay, our team of tax specialists can ensure you are compliant with all your Corporation Tax obligations.

In addition, being business advisers as well as chartered accountants, we can take a closer look at your organisation and support you with careful tax planning, helping you to implement tax-efficient strategies for the future.

To discuss your requirements in more detail with one of our experts, contact us at any of our three offices, in Cambridgeshire, Bedfordshire or Hertfordshire, today.

Link: Corporation Tax charge and rates from 1 April 2022 and Small Profits Rate and Marginal Relief from 1 April 2023

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