UK Corporation Tax bills jumped to a new all-time high of £87.7bn last year*, up another 8% from £81.2bn last year and up 58% in five years from £55.6bn in 2018/19.
The main rate of corporation tax was raised from 19% to 25% on April 1 2023 – an increase of almost a third. It is expected that this rise will continue to feed through into high corporation tax payments over the next year.
The increase in Corporation Tax took the UK from amongst the competitive out of major economies to being at the same level as France (25%) and Italy (24%) and above the European average of 21.5%**.
Anthony Davies, tax partner in our London office, comments:
The last few years have seen a huge jump in the share of profits that UK businesses have to pay in tax.
Higher Corporation Tax means less money for businesses to reinvest in job creation and R&D. It also means reduced returns for shareholders.
One of the attractions of the UK to inward investors was its relatively low tax rate compared to other European countries but that advantage has been lost.
With this Government promising to deliver economic growth, one of the first steps they should be taking is publishing a roadmap of how they are going to reduce Corporation Tax down to its pre-COVID levels.
Small businesses would also like to see the small profits rate – which currently only applies to companies with profits under £50,000 – cover more companies.
Corporation tax receipts have surged to £88bn – a new record
*Source: HMRC.
**Source: Tax Foundation
