Reminder: Corporation tax rates to drop
3rd December 2015
The good news for UK Companies in the July Budget was the announcement that Corporation tax rates will be cut to 18% from the current 20% rate by 2020.
This is proposed to be enacted by a 1% cut in 2017 to 19%, with a further 1% cut in 2020.
This will mean a company that currently makes £50,000 taxable profits will pay £9,000 tax at 18% in 2020. Currently there would be a tax charge of £10,000 at 20%.
For large UK companies who were paying 28% Corporation tax in 2011 the recent period has been one of significant tax reductions.
A large company making £10 million taxable profits per year would have paid £2.8 million in 2011. In 2020 at the same level of profits the tax would be £1 million less at £1.8 million.
Although this is continued great news for larger businesses there is a sting in the tail for smaller owner managed businesses with the introduction of higher taxes on dividends coming in from April 2016.
Author: Alex Koupland, Client Manager @ Plus AccountingAny views or opinions represented in this blog are personal, belong solely to the blog owner and do not represent those of Plus Accounting. All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site.