Home Business News Corporation tax hike could hit struggling UK businesses, warns expert

Corporation tax hike could hit struggling UK businesses, warns expert

by LLB Finance Reporter
1st Mar 23 12:30 pm

Businesses will be under pressure to find an extra £18 billion per year of Corporation Tax payments by 2025/26 following a rate rise in April, according to top 10 accountancy Azets UK.

Corporation Tax, which is currently 19%, is due to increase to 25% on 1 April 2023. It will raise an estimated additional £12bn in the first year, rising to £18bn by 2025/26.

UK businesses currently contribute around £68bn in Corporation Tax per annum, equating to 2.9% of UK GDP.

A leading SME expert is warning that the additional tax burden could lead to a significant reduction in investment and the risk of businesses closing.

Nicola Campbell, a partner at UK Top 10 accountancy firm Azets, said: “Last October, the Government announced that it will persevere with an increase in the baseline Corporation Tax from 19% to 25% on annual profits of more than £250,000.

“Businesses across the UK will be paying an additional £18bn per annum by 2025/26.

“It is a significant increase and some businesses may not yet be fully aware of the implications. There is concern that the scale of the tax increase along with rising interest rates and inflationary pressures will restrict inward investment opportunities and in turn growth.

“The tax burden on business has become higher than we have seen in the last two decades across the board, from National Insurance Contributions (NICs) to Corporation Tax.

“My greatest worry, though, is the impact on owner managed businesses who can’t invest in growing their business as they need the profits to pay the household bills.

“With an increase on this scale it is more important than ever that UK SMEs actively manage their Corporation Tax liabilities.

“Cash and liquidity are critical for every business so we would encourage owners and directors to take full advantage of available tax reliefs.”

Leave a Comment

You may also like


Sign up to our daily news alerts

[ms-form id=1]