In April 2023, the rate of corporation tax will increase to 25%, a 6% increase from the current 19% while at the same time creating a small profits rate for businesses with less than £50,000 profit who will continue to pay corporation tax at the current 19% rate.

The hike in corporation tax is expected to raise an additional £22bn in revenues a year with the tax take increasing from £48.8bn in 2022-23 to £71.3bn in 2023-24.

‘To balance the need to raise revenue with the objective of having an internationally competitive tax system, the rate of corporation tax will increase to 25%, which will remain the lowest rate in the G7. In order to support the recovery, the increase will not take effect until 2023,’ the Chancellor Rishi Sunak said.

‘Businesses with profits of £50,000 or less, around 70% of actively trading companies, will continue to be taxed at 19%. A tapered rate will also be introduced for profits above £50,000, so that only businesses with profits of £250,000 or greater will be taxed at the full 25% rate.’

The corporation tax rise will come into effect well after the point when the Office for Budget Responsibility (OBR) expects the economy to return to pre-pandemic levels and on the back of an unprecedented period of support for business investment through a 130% upfront capital allowances super-deduction for investment in plant and machinery.