A leading financial expert has urged businesses to consider how they can mitigate the impact of forthcoming Corporation Tax changes.

Mike Jordan (pictured), founder of Jordan Financial management in Sutton Coldfield, said: “With the increase in Corporation Tax going ahead on April 1, 2023 for companies with taxable profits over £50,000, there are things that businesses can do now to take advantage of the current lower rates.

“For example, if a company has a large profit now, but their year end isn’t until after the rates change next April, then they might find it beneficial to bring their tax year end forward, so that it all gets taxed at the 19% rate rather than some at the 25%.

“This also applies if there is a transaction such as a sale of an asset, that leads to a larger than normal one-off profit.”

Having been initially dropped in Kwasi Kwarteng’s mini-Budget in September, the Corporation Tax (CT) rate increase first announced in Spring is now to go ahead as planned on April 1 next year.

The rate of CT will be increasing to 25 per cent for companies with taxable profits above £250,000, although this threshold will be proportionately reduced for short accounting periods and where there are associated companies.

Companies with taxable profits below £50,000 will continue to pay CT at the current rate of 19 per cent.

However, companies with taxable profits between £50,000 and £250,000 will pay 19 per cent on the first £50,000 and 26.5 per cent on the next £200,000.

Mr Jordan, whose business is Sutton Coldfield’s longest-established independent financial advisers, said: “While the changes to Corporation Tax do not apply until 1 April 2023, if your company’s accounting period staddles that date, the accounting period will have to be split.

“So, that would create two accounting periods, one prior to 1 April and one after, with profits time apportioned. Those for the period before 1 April 2023 are taxed at 19 per cent, while those for the period after 1 April 2023 are taxed at the relevant rate depending on the level of profits.

“Because of the changes to Corporation Tax, how you approach your end-of-year accounting in 2023 can have a material effect on the amount of tax you will pay – so I would advise businesses with concerns to get professional guidance.”