The Chancellor has confirmed that the previously announced increase in Corporation Tax will proceed as scheduled next month. Starting from 1st April 2023:
Companies earning a taxable profit of £50,000 or less annually will still pay Corporation Tax at a rate of 19% under the 'small profits rate'.
Companies with taxable profits between £50,001 and £250,000 annually will pay Corporation Tax at a rate of 25%, with a deduction for 'Marginal Relief'.
Companies with taxable profits of £250,001 or more annually will pay Corporation Tax at a rate of 25%.
In place of the expiring super-deduction scheme, 'full expensing' will be implemented from 1st April 2023 for an initial three-year period. This allows qualifying companies to use 100% of their investments in qualifying equipment to reduce their taxable profits. Even investments in non-qualifying assets, such as long-life assets, will benefit from a 50% first-year allowance during this period.
Starting April 2023, the Annual Investment Allowance will be permanently fixed at £1 million, providing small businesses with 100% relief against the cost of qualifying equipment, covering most asset purchases.
For loss-making SMEs, a credit of £27 for every £100 spent on R&D will be claimable starting from 1st April 2023, provided that R&D expenses comprise at least 40% of their total expenditure.
The planned 11p fuel duty rise will be cancelled, maintaining last year's 5p reduction for another year, benefiting business owners who pay for fuel for business travel.
The Energy Bills Discount Scheme for businesses will take effect from April 2023, providing eligible non-domestic consumers with a per-unit discount on wholesale prices for a further year.
To simplify the tax system for small businesses, the government will expand the cash basis accounting system, allowing them to record their income and costs based on actual payment dates. HMRC guidance and key forms for small businesses will also undergo a systematic review.
For more information on the Spring Budget changes, you can refer to the full report available on the government's website.