2023 Corporation Tax Rates
Discussion
A handy calculator here:
https://www.pattersonhallaccountants.co.uk/corpora...
When the announcement was made in the 2021 Budget I thought the tapered rates would be bands, increasing from 19% to 25% but no. Apparently it's 19% up to £50,000 and then 26.5% from £50,000 - £250,000.
The combined corporation tax rate for say £100,000 profit will be 22.75%, an increase of £3,750.
If we assume there is one Director/shareholder withdrawing the net profit as dividends, that will suffer the 1.25% increase in dividend tax too so further tax of £940.
And if they employ people, add in the additional 1.25% employers NI reducing profits.
For some it may be worthwhile not making pension contributions this year or next, and then using carry forward in 2023 and paying three years worth in one go.
https://www.pattersonhallaccountants.co.uk/corpora...
When the announcement was made in the 2021 Budget I thought the tapered rates would be bands, increasing from 19% to 25% but no. Apparently it's 19% up to £50,000 and then 26.5% from £50,000 - £250,000.
The combined corporation tax rate for say £100,000 profit will be 22.75%, an increase of £3,750.
If we assume there is one Director/shareholder withdrawing the net profit as dividends, that will suffer the 1.25% increase in dividend tax too so further tax of £940.
And if they employ people, add in the additional 1.25% employers NI reducing profits.
For some it may be worthwhile not making pension contributions this year or next, and then using carry forward in 2023 and paying three years worth in one go.
Good plan but if your income isn’t predictable and you make less than £170k profit in that third year you could miss out on some benefit before.
You do also miss two years worth of investment returns. 10% on £40k would compensate for some of the extra tax.
I can’t be alone in thinking this is another kick in the balls for small business owners. From a conservative government too. It’s massively backward thinking as from my point of view I think I’ll just do less work to keep the tax sensible.
I didn’t really plan to employ anyone else but any option of that is now right out of the window.
You do also miss two years worth of investment returns. 10% on £40k would compensate for some of the extra tax.
I can’t be alone in thinking this is another kick in the balls for small business owners. From a conservative government too. It’s massively backward thinking as from my point of view I think I’ll just do less work to keep the tax sensible.
I didn’t really plan to employ anyone else but any option of that is now right out of the window.
Rufus Stone said:
A handy calculator here:
https://www.pattersonhallaccountants.co.uk/corpora...
When the announcement was made in the 2021 Budget I thought the tapered rates would be bands, increasing from 19% to 25% but no. Apparently it's 19% up to £50,000 and then 26.5% from £50,000 - £250,000.
The combined corporation tax rate for say £100,000 profit will be 22.75%, an increase of £3,750.
If we assume there is one Director/shareholder withdrawing the net profit as dividends, that will suffer the 1.25% increase in dividend tax too so further tax of £940.
And if they employ people, add in the additional 1.25% employers NI reducing profits.
For some it may be worthwhile not making pension contributions this year or next, and then using carry forward in 2023 and paying three years worth in one go.
That's some fhttps://www.pattersonhallaccountants.co.uk/corpora...
When the announcement was made in the 2021 Budget I thought the tapered rates would be bands, increasing from 19% to 25% but no. Apparently it's 19% up to £50,000 and then 26.5% from £50,000 - £250,000.
The combined corporation tax rate for say £100,000 profit will be 22.75%, an increase of £3,750.
If we assume there is one Director/shareholder withdrawing the net profit as dividends, that will suffer the 1.25% increase in dividend tax too so further tax of £940.
And if they employ people, add in the additional 1.25% employers NI reducing profits.
For some it may be worthwhile not making pension contributions this year or next, and then using carry forward in 2023 and paying three years worth in one go.
king leap and agreed I was under the impression it would be stepped tapered too vs binary like this. That is a big ask for small businesses earning just over that £50k mark no doubt they will leave in the Div Tax too which was only introduced because Corp Tax was low.Then also bear in mind that small business got pretty much f
k all help during covid and you just couldn't make this up.TX.
Rufus Stone said:
Where you are over basic rate tax, the combined taxes on dividends means that HMRC receives more than you do. 
I understand taxation is important for reasons that are obvious from multiple angles and yes its high (stupidly high) but as annoying as that is what is more frustrating is the waste. I can't phathom the amount of tax payers money that goes to waste or used without a care in the world. Really just makes me so angry.
Rufus Stone said:
Lucky you. 
The level of taxation is getting out of hand though. Let's take an ordinary PAYE on the element over £50,000 odd:
Income tax 40%
Employee NI 3.25%
Employer NI 15.05%
Total tax 58.30%
Madness.
not quite true as you havent factored in the personal allowance or the basic rate either so the effective tax rate is probably less than 30% when you factor them inThe level of taxation is getting out of hand though. Let's take an ordinary PAYE on the element over £50,000 odd:
Income tax 40%
Employee NI 3.25%
Employer NI 15.05%
Total tax 58.30%
Madness.
Rufus Stone said:
A handy calculator here:
https://www.pattersonhallaccountants.co.uk/corpora...
When the announcement was made in the 2021 Budget I thought the tapered rates would be bands, increasing from 19% to 25% but no. Apparently it's 19% up to £50,000 and then 26.5% from £50,000 - £250,000.
The combined corporation tax rate for say £100,000 profit will be 22.75%, an increase of £3,750.
If we assume there is one Director/shareholder withdrawing the net profit as dividends, that will suffer the 1.25% increase in dividend tax too so further tax of £940.
And if they employ people, add in the additional 1.25% employers NI reducing profits.
For some it may be worthwhile not making pension contributions this year or next, and then using carry forward in 2023 and paying three years worth in one go.
How does the combined tax rate for the "one man band" director/shareholders compare to somebody on PAYE? AIUI it's possible to avoid both Ers and Ees NI if they pay themselves below the thresold and take the money as dividends so surely the increase in ees and ers rates is irrelevant?https://www.pattersonhallaccountants.co.uk/corpora...
When the announcement was made in the 2021 Budget I thought the tapered rates would be bands, increasing from 19% to 25% but no. Apparently it's 19% up to £50,000 and then 26.5% from £50,000 - £250,000.
The combined corporation tax rate for say £100,000 profit will be 22.75%, an increase of £3,750.
If we assume there is one Director/shareholder withdrawing the net profit as dividends, that will suffer the 1.25% increase in dividend tax too so further tax of £940.
And if they employ people, add in the additional 1.25% employers NI reducing profits.
For some it may be worthwhile not making pension contributions this year or next, and then using carry forward in 2023 and paying three years worth in one go.
db10 said:
oh yeah sorry missed that ! fair enough - i mean if you really want a bad effective tax rate look at the rate between 100 and 120k !
Have a look at middle-earning Umbrella company employees in Scotland when these tax changes come in, between ~40k and ~50k it's 70% marginal tax rate.Rufus Stone said:
A handy calculator here:
https://www.pattersonhallaccountants.co.uk/corpora...
When the announcement was made in the 2021 Budget I thought the tapered rates would be bands, increasing from 19% to 25% but no. Apparently it's 19% up to £50,000 and then 26.5% from £50,000 - £250,000.
The combined corporation tax rate for say £100,000 profit will be 22.75%, an increase of £3,750.
If we assume there is one Director/shareholder withdrawing the net profit as dividends, that will suffer the 1.25% increase in dividend tax too so further tax of £940.
And if they employ people, add in the additional 1.25% employers NI reducing profits.
For some it may be worthwhile not making pension contributions this year or next, and then using carry forward in 2023 and paying three years worth in one go.
We do business in Japan. Headline CTR is 23%, but there's also local taxation to pay. Overall ~30% is normal.https://www.pattersonhallaccountants.co.uk/corpora...
When the announcement was made in the 2021 Budget I thought the tapered rates would be bands, increasing from 19% to 25% but no. Apparently it's 19% up to £50,000 and then 26.5% from £50,000 - £250,000.
The combined corporation tax rate for say £100,000 profit will be 22.75%, an increase of £3,750.
If we assume there is one Director/shareholder withdrawing the net profit as dividends, that will suffer the 1.25% increase in dividend tax too so further tax of £940.
And if they employ people, add in the additional 1.25% employers NI reducing profits.
For some it may be worthwhile not making pension contributions this year or next, and then using carry forward in 2023 and paying three years worth in one go.
After much thought I have decided to cut back my business by 2023 so that the profit will be under £50,000 pa. I refuse to be in a situation where the government benefits more from my hard work than I do.
I'll also start accessing my pension so that I don't have to pay stupid rates of dividend tax.
I'll also start accessing my pension so that I don't have to pay stupid rates of dividend tax.
Rufus Stone said:
After much thought I have decided to cut back my business by 2023 so that the profit will be under £50,000 pa. I refuse to be in a situation where the government benefits more from my hard work than I do.
I'll also start accessing my pension so that I don't have to pay stupid rates of dividend tax.
My thoughts exactly. Time is worth more than the extra (now reduced further) income.I'll also start accessing my pension so that I don't have to pay stupid rates of dividend tax.
I know its easy to say when it affects you directly but this policy is really backward thinking and the opposite of what the government should be encouraging.
Gassing Station | Business | Top of Page | What's New | My Stuff