Everything you need to know about Corporation Tax

Changes are due to be made in corporation tax next year. This video explains what corporation tax is and how the numbers will add up.

Video transcription

Hi there.

My name is Ian Hawkins.

I’m the Head of Content here at Swoop.

Oh, not quite. Okay.

Let’s talk about Corporation tax. What is it?

What’s it going to cost?

And is there a smarter way to pay it?

So, first of all, what is it?

Corporation Tax is is what a business pays

on its profits for the whole year.

So, if Acme Industries takes in a million

pounds in one year and it spends half

a million pounds on wages, rent, raw materials,

marketing, all that sort of thing, they’ll pay

Corporation Tax on the other half million pounds.

How much money is that?

Well, under the current rules, Corporation Tax is 19%.

So here’s a quick health warning.

It is November 2022 and these

rules are going to change.

From April 2023, Corporation Tax is set to go up

to 25% on profits of £250,000 and over.

Small companies with profits up to £50,000 will

continue to pay Corporation Tax at 19%.

And profits between £50,000 and £250,000

There’s going to be a tapered

rate between those two figures.

What’s happening with Acme Industry’s

half million pound profit?

Well, the Corporation Tax for

this year will be £95,000.

Corporation Tax on the same amount of

profit for next year will be £125,000.

That’s an increase of 30 grand.

As with any tax that is not a flat rate,

it can pay to know what your profits are.

Because if you get close to a threshold, it might

make more sense to invest your profit into a deductible

asset like a new staff member or a marketing campaign

than it is to pay that increased tax.

What about paying that big tax bill?

The thing is, paying 20 or 25% of your

annual profit in one go can really hurt.

Especially if you can think of better things to

spend it on than His Majesty’s Revenue and Customs.

This is where Corporation Tax Finance can really help.

It’s not really for businesses that can’t afford

their tax bill so much as it’s for

businesses that would rather spend their money better.

Here’s how it works.

The lender pays HMRC directly and you,

the borrower, pay them back each month.

So rather than pay one big

lump sum, you flatten your outgoings.

And this frees up all of that money, up

to 25% of your annual profit to invest in

property, machinery, people, things that will generate growth.

It’s not for me to tell you how to spend your

money, because remember, you also get tax breaks on that loan

repayment because it comes off the bottom line of profit.

Now, if you feel your tax bill is holding

back your growth, Corporation Tax Finance and VAT Finance,

which works in exactly the same way, could unlock

the next chapter in your company history.

Do you want to know more?

Of course you do.

Visit Swoopfunding.com, where you’ll find all the info.

Ready to grow your business?

Get started

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