2021: how was it for SMEs?

2021 continued to be ‘interesting times’ for SMEs: for many no doubt it was rather more ‘interesting’ than they might have wished for. And tax made its contribution to that.

Policy announcements

Probably the single most striking change affecting SMEs was the announcement in the March Budget that the corporation tax rate will increase to 25% in 2023. Only the very smallest companies with annual profits of less than £50 000 will be wholly unaffected with marginal relief available to those with profits between £50 000 and £250 000 (subject in each case to counting in associated companies). Logically this ought to be reflected in a corresponding reduction in the rate at which income tax is charged on dividends; but the successive moves away from a classic imputation system have afforded the chancellor...