Budget – Corporation tax rates
With effect from 1 April 2017 the corporation tax rate will be reduced to 19% and with effect from 1 April 2020 to 18%. This is fine provided that the additional costs that companies will be bearing such as pension costs under auto-enrolment and paying the living wage to employees can be either absorbed or passed on to customers but still leave the company profitable.
For accounting periods starting on or after 1 April 2017, the government will introduce new corporation tax payment dates for companies to pay in quarterly instalments in the third, sixth, ninth and twelfth months of their accounting period. This measure affects companies with annual taxable profits of £20 million or more. Where a company is a member of a group, the £20 million threshold will be divided by the number of companies in the group.
Whether the current quarterly payment of corporation tax by companies whose taxable profits exceed £1,500,000 will remain in place is not clear from the headline news.