Navigating the 2023/2024 UK Tax Changes: What Businesses Need to Know

The 2023/2024 tax year brings significant changes to the UK tax system that businesses must be aware of. One of the most significant changes is the increase in corporation tax rates. From April 2023, the corporation tax rate will increase from 19% to 25% for companies with profits over £250,000. This change is part of the government's efforts to increase revenue and fund public services in the wake of the COVID-19 pandemic.

While smaller businesses with profits under £50,000 will continue to pay the current rate of 19%, companies with profits between £50,000 and £250,000 will pay a tapered rate of corporation tax. The new tapered system means that businesses with profits between £50,000 and £250,000 will pay corporation tax at a rate between 19% and 25%, depending on their profit level.

In addition to the corporation tax changes, the reduction in R&D relief rates and the introduction of Making Tax Digital are also significant changes that could impact businesses' profitability. As a result, businesses need to be aware of the potential impact of HM Revenue and Customs on their profits in the coming year.

To minimize the impact on their bottom line, businesses should stay informed about the latest regulations, take advantage of support schemes, and engage in effective tax planning. Tax planning can help businesses manage their tax liabilities, optimize their profits, and make informed decisions about investments and future growth opportunities.

There are several ways that businesses can engage in tax planning. For example, they can make use of available tax reliefs, such as capital allowances, research and development tax credits, and patent box relief. Another approach to tax planning is to structure business activities in a tax-efficient manner, such as considering the timing of capital expenditure, the location of assets, and the use of employee benefit schemes to reduce their tax liabilities.

Seeking professional advice from tax advisors and accountants can be valuable for businesses looking to develop and implement an effective tax planning strategy that meets their unique needs and goals. By taking a strategic approach to tax planning and staying informed about the latest changes to the tax landscape, businesses can thrive and succeed in a challenging and ever-changing environment.

In conclusion, businesses need to be aware of the significant changes to the UK tax system that will take effect in the 2023/2024 tax year.

The increase in corporation tax rates, reduction in R&D relief rates, and introduction of Making Tax Digital all have the potential to impact businesses' profitability.

Effective tax planning, combined with staying informed and taking advantage of support schemes, can help businesses manage their tax liabilities and optimize their profits.

Seeking professional advice can also provide businesses with valuable guidance and support in developing an effective tax planning strategy that meets their unique needs and goals.

Why not speak with a member of our team today? We have found tax saving opportunities for 95% of the businesses we speak to. Book a free call here.