Budget Announcement One

Corporation tax to rise to 25%

The main rate of corporation tax will remain at 19% for the financial years beginning 1 April 2021 and 1 April 2022.

From 1 April 2023, the main rate will increase to 25% on profits over £250,000.

A small profits rate will be introduced for companies with profits of £50,000 or less, which will continue to be charged at 19%. It will not be available to close investment-holding companies.

Companies with profits between £50,000 and £250,000 will pay tax at the main rate, but this will be reduced by a marginal relief creating a tapered corporation tax rate.

The lower and upper limits will be proportionately reduced for short accounting periods.


Corporation tax loss relief

The corporation tax trading loss carry-back rule will be temporarily extended from the existing one year to three years. This measure will cover company accounting periods ending in the period 1 April 2020 to 31 March 2022.

After the loss has been carried back to the preceding year, a maximum of £2m of unused losses will be available to carry back against profits of the same trade to the earlier two years. This £2m cap applies separately for both 2020/21 and 2021/22.

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