Budget 2023 Corporation Tax Increase – Effect on green sector organisations

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Social enterprises, not-for-profit companies, and sustainable sector businesses pay the same rate of corporation tax as not-so-social-or-sustainable companies. The rate has been 19% for some years now (since 1 April 2017 to be exact). From 1 April 2023 the rate of corporation tax rate increases if your company profits are more than £50,000. The rates become as follows:

  • Company profits up to £50,000 taxed at 19%.
  • Company profits from £50,001 to £250,000 taxed at 26.5% (sometimes known as the “marginal rate of corporation tax”).
  • Company profits from £250,001 upwards taxed at 25%.

This means that where possible you should try to plan income and expenditure, where timing is discretionary, to avoid big profits (more than £50,000) in one year followed by lower profits (less than £50,000) in another year.  For example, discretionary pension payments could be considered in accounting years which would otherwise have profits above £50,000.

For more information or advice on this please contact us.