Starting April 1, 2023, there have been changes to corporate tax rules, making it crucial to simplify the details:

New Corporate Tax Rates:

For standalone companies, profits exceeding £250,000 are now taxed at a 25% main rate, while those below £50,000 stay at the current 19%. Companies with profits between £50,000 and £250,000 face a 25% rate with some relief.

For groups, profit thresholds are divided by the number of ‘associated companies’ to determine the tax rate.

Understanding Associated Companies:

Before April 1, 2023, group rules were different, but now, profits spanning that date are split into two periods. The first is taxed at 19%, and the second’s rate depends on the number of associated companies.

A company is associated if, at any time in the accounting period, one controls the other, or both are under the control of the same person or group. This definition is broader, including control by individuals.

Exclusions from the Associated Companies:

Certain group companies, like dormant ones, passive holding companies, and those owned by associates, may not need to be treated as associated, unless there’s ‘substantial commercial interdependence.’

Are you affected?

Understanding the number of associated companies you have should be established as soon as possible. This may determine the rate of Corporation Tax which applies for your company. Why not speak to one of our Tax team member today? We offer a free first time consultation. Get in touch today!

Remember, tax laws may change, so staying updated is crucial for making informed decisions about your RSUs.



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