As business owners, the new corporation tax rules for 2023/2024 have been on our minds a lot lately. The changes bring a mix of both challenges and opportunities, and we know that we need to be well-informed in order to make the best decisions for our company.
One of the most significant changes is the increase in the main rate of corporation tax from 19% to 25%. While this increase is certainly a concern, we are also encouraged by the introduction of the new ‘super-deduction.’ As business owners who are constantly looking for ways to grow and invest in our company, the opportunity to claim 130% of our investment in plant and machinery as a tax deduction is very appealing.
As small to medium-sized business owners, the increase in taxes due to the new corporation tax rules for 2023/2024 can be quite daunting. The introduction of the new marginal rate for companies with profits between £50,000 and £250,000 will increase taxes in these businesses along with the higher rate above £250,000 of 25%.
In addition to these changes, businesses can also reduce their corporation tax bill by investing in pensions. By making contributions to a registered pension scheme, companies can reduce their taxable profits and bring down their corporation tax bill. This is an attractive option for business owners who are looking to plan for their later life, as they not only reduce their current corporation tax bill but also build a fund that can be used to support their retirement.
However, it’s important to note that there are limits on the amount that can be contributed to a pension scheme each year, and these limits can vary depending on the individual circumstances. As such, it’s important to speak with a financial advisor or accountant to ensure that any pension contributions are structured in the most tax-efficient way possible.
The new corporation tax rules for 2023/2024 bring a mix of challenges and opportunities for business owners like us. While the increase in the main rate of corporation tax is a concern, the introduction of the super-deduction and the marginal rate for small to medium-sized businesses provide some much-needed support. We are determined to stay informed and make the best decisions for our company in light of these changes, including taking advantage of tax planning opportunities such as investing in pensions.