Corporation Tax Up
When the current Prime Minister was Chancellor he announced an increase in the main rate of corporation tax to 25% to apply to profits above £250,000 from 1 April 2023.
We can help you decide whether the IR35 rules apply to your contracts.
Under the previous administration this decision was reversed but the 25% rate will now apply next year.
Companies with profits up to £50,000 per year will continue to pay corporation tax at the small profits rate of 19%. A company with total profits between £50,000 and £250,000 will pay 19% on the first £50,000 and a marginal rate of 26.5% on the rest.
Contractors who work through their own personal service companies will not be happy that the off-payroll working rules – which the previous administration vowed to repeal – are staying in place. These rules require large private sector businesses and all public sector bodies to decide whether the contractors they engage should be taxed as employees under the IR35 rules. Any agencies or intermediaries in the hiring chain are ignored for this decision.
Contractors can ask their ultimate customers whether they are categorised as a large company. Contractors working for a small or medium sized business must make their own decisions about whether the IR35 rules apply to the contract.