UK corporation tax bills hit record £84bn
It comes as corporation tax was raised from 19% to 25% on April 1 2023, an increase of almost a third
UK corporation tax bills rose by 21% to a record £83.8bn last year, up from £69.3bn the year before, according to findings from UHY Hacker Young.
It comes as corporation tax was raised from 19% to 25% on April 1 2023, an increase of almost a third.
However, UHY Hacker Young said that very few businesses will have completed a full year under the new rates, meaning that the “full impact of that tax increase is yet to be felt”.
The increase in corporation tax is also partly being driven by a recovery in profits after UK businesses suffered during the pandemic.
Anthony Davies, tax partner at UHY Hacker Young, said: “The amount of extra tax being paid by UK businesses raises the question of whether the UK should be increasing the headline corporation tax rate by such a dramatic amount. The Treasury’s is currently receiving record-high corporation tax receipts. This is not the only area of tax that has seen a sharp increase in amounts paid by taxpayers.
“As businesses already make such a big contribution to taxes, it might be beneficial to lower the corporation tax rate to stimulate the private sector and encourage foreign direct investment. I have spoken to several businesses that are pausing their inward investment in the UK due to the multiple changes and higher rates of tax.”
He added: “Considering how much money is flowing in from businesses there is room for manoeuvre. If the corporation tax rate is too high then businesses will be put off locating or investing in the UK. The UK should always be looking for that competitive edge – especially post-Brexit. A corporation tax cut may just be the business-friendly inducement the government is looking for.”
