The Company Tax Changes

and How to Plan for Them

By Carl Bayley BSc FCA

This guide covers the four major tax changes affecting company owners:

• The corporation tax increase
• The 130% Super Deduction
• The generous new rules for losses
• The higher tax rates on dividends (and national insurance cuts)

It's essential reading for ALL company owners, including owners of property investment companies.

The new edition was published in December 2022 and includes many recent tax changes, including those announced in the November Autumn Statement.

From April 2023 there will be three corporation tax rates: 19% (profits £50,000 or less), 26.5% (profits between £50,000 and £250,000) and 25% (profits over £250,000). The higher rates affect some companies from as early as May 2022.

This guide shows you how to maximise your tax savings both before and after the increase. In one example a company saves £32,250 by selling an investment property before 1st April 2023.

At present owning more than one company does not affect your tax. In the future owning more than one company (such as a property company) could result in a higher tax bill. Sometimes it will save you tax.

The guide also provides full details of the generous 130% Super Deduction that allows companies to deduct up to 130% of their spending on things like new vans, machinery, furniture and computer equipment.

We also take a look at the new rules for losses that allow some smaller companies to bring in extra tax refunds of up to £76,000 and, finally, optimal salaries and dividends for 2022/23 and 2023/24.

What Information is Contained in the Guide?

Like all Taxcafe guides, The Company Tax Changes is written in plain English and contains numerous worked examples and tax planning ideas.

Subjects covered include:

• How much the corporation tax increase will cost YOUR company and when it will start to affect you.
• The impact on trading companies, property companies and investment companies.
• The concept of associated companies explained in detail and why sometimes they will increase your tax bill and sometimes reduce it.
• Why even simple arrangements like sharing business premises with a family member’s company could increase your company’s tax bill.
• Simple steps to take to generate savings, equivalent to increasing annual profits by over £5,000.
• Tax planning strategies to ensure profits are taxed at the lowest marginal tax rate possible, including:
• Spending you can defer
• How accounting adjustments can help
• Timing company pension contributions to create the best savings
• Expanded guidance on how to change your company’s accounting date to save corporation tax.
• How to save tax on property capital gains - even after the increase takes effect.
• How companies with seasonal businesses can save corporation tax.
• Full details of the 130% Super Deduction: the types of spending covered and when it must take place.
• Whether it's better to buy new assets (130% Super Deduction) or cheaper second-hand assets (100% annual investment allowance).
• When it's better to treat purchases of office equipment and tools as capital expenditure, including a list of items to consider.
• The pros and cons of postponing capital allowances to get corporation tax relief at a higher rate in future.
• The extended loss carry back for company trading losses, including:
• When to use the simple claim mechanism to obtain a speedier tax refund
• Whether it's better to get a tax refund now or carry losses forward to generate bigger tax savings in the future
• Optimal salaries and dividends for small company owners in 2022/23 and 2023/24.
• How much salary to pay yourself if you have income over £100,000.
• When big payments made by larger companies may be better taken as salaries rather than dividends.
• An expanded section on deferring employee bonuses to save corporation tax.