Budget 2023: Corporate tax
The double-blow of the hiked rate of corporation tax coinciding with the end of the super-deduction feared by UK businesses did not materialise in today’s budget.
Moving away from the already promised increase in the rate of corporation tax to 25% from April 2023 proved to be a step too far for a Government already plagued by U-turns, but the blow was softened by the retention of the “super-deduction”. The super-deduction allows businesses to deduct the full cost of investments from their profits as soon as they spend the money, and is considered essential to encourage much-needed investment by businesses. The new £9 billion package will remain in force for three years, with a promise to make it more permanent as soon as it becomes responsible to do so.
There was also some good news for R&D intensive SMEs, that will benefit from an “enhanced credit”, reducing the burden of the lower rates for R&D relief due to come into force in April 2023.
Read our expert commentary on Personal Tax issues here.
The rate of corporation tax, paid on company profits, will rise next month, the chancellor has confirmed.
It will go up from 19% to 25% for companies with over £250,000 in profits, Jeremy Hunt told the Commons.
He also announced a new scheme to allow every pound invested by businesses in IT equipment, plants or machinery to be deducted in full from taxable profits.”