Law firms with profits of more than £50,000 will be subject to higher rates of corporation tax from 2023, it was confirmed today.
Chancellor Rishi Sunak announced in his budget speech that tax will increase from the current 19% to 25% for companies recording annual profits of at least £250,000. Increases will be tapered for companies reporting profits of between £50,000 and £250,000.
Sunak said the increase to 25% will still leave the UK with the lowest rate of corporation tax in the G7, and was needed to support the country’s recovery from the Covid pandemic.
According to Treasury projections, the corporation tax increase will bring in an extra £11.9bn in 2023/24, rising to £17.2bn in 2025/26.
Sunak also confirmed he would maintain the income tax personal allowance and higher rate threshold from April 2022 until April 2026. Inheritance tax thresholds will also remain at their current levels until April 2026.