It has now been confirmed that the rate of corporation tax will, in fact, increase from 19% to 25% on 1st April 2023 for companies with taxable profits in excess of £250,000.
For companies where their year end straddles 1st April 2023 the accounting period is split into two periods, one up to 31st March 2023 and the other from 1st April 2023 to the year end. The taxable profits are time apportioned between the two periods. In the event that your company sells an asset (e.g. a property) and generates a significant chargeable gain prior to 31st March 2023, in an accounting period which straddles this date, then part of this gain will be charged at the new higher rate of corporation tax. In such circumstances it may be worthwhile considering shortening your year end to 31st March 2023 in order to ensure that the entire chargeable gain is subject to the current lower rate of corporation tax. Contact an adviser at Drummond Laurie to discuss this further if you think it may impact on you.