Like personal taxes, the planned business tax changes for 23/24 have been revised on several occasions and we could still see further alterations in the forthcoming budget. Fortunately we are only dealing with UK wide taxes for the most part which makes it a bit easier. Here's where we seem to be today.
The rate of Corporation tax for 23/24 will rise to 25% for companies earning over £250,000. Companies earning up to £50,000 pay 19% and a marginal rate will apply between £50,000 and £250,000. The effective rate of tax within this band is 26.5%.
The secondary threshold for National Insurance, like the primary threshold, has been frozen for the foreseeable future. This will result in significant real increases in NI payments from employers. Fortunately the primary threshold has been re-aligned with the income tax personal allowance which may allow for some increase in salaries for owner-directors. Sadly the amount of dividend these individuals can take tax free is dropping significantly.
Careful consideration of the remuneration packages for owner-directors will be needed especially for those companies close to, or within, the marginal rate of corporation tax where capital allowances may also be important to assist the maximisation of tax allowances and the minimisation of effective tax rates.