Deferred tax rate to increase 14th June 2021 Deferred tax is a provision on the balance sheet for timing differences in tax and accounting treatment of certain items, and is measured at the rate of tax that the differences are expected to reverse in the future. In recent years, deferred tax has been measured at the current corporation tax rate of 19%, as there had been no legislation to suggest corporation tax rates would increase. However, Finance Bill 2021 announced increases to corporation tax from April 2023, meaning that Companies will now pay between 19 and 25% corporation tax depending on the size of the profits of the Company and any associated Companies. On 24th May 2021, the Finance Bill was ‘substantively enacted’ – meaning it had passed through the Commons and was only awaiting passage through the Lords and Royal Assent. As a result, for balance sheets prepared to a date after 24th May 2021 the deferred tax rate used must be the future expected rate for that entity, up to 25%. For any balance sheets prepared to a date prior to 24th May 2021, but not signed and filed until after this date, the change will be a non-adjusting post balance sheet event, and must be disclosed if it is material. Note that the Finance Bill received Royal Assent on 10th June 2021.