Business tax

Corporation tax — rates for small and large entities

Corporation tax for incorporated businesses (companies that are legal entities) is 20 per cent on profits not exceeding £300,000 — small profits rate. For companies with profits in excess of £1.5m, the corporation tax rate, previously 23 per cent, falls to 21 per cent — main rate. There is marginal relief for companies with profitability between £300k and £1.5m.

It is important to get the legal business structures right at the start up, so that the tax implications can be properly understood.

It’s said that UK businesses pay more corporation tax than their competitors in many other countries, even when those countries have higher tax rates. Businesses contribute over 25 per cent to the total tax receipts, but there is a variance in tax paid by companies in different sectors.

Corporation tax assessment
This tax applies to all limited companies’ profits. Companies have to assess their own tax liability and make the correct payment to HMRC, who quickly assess the liability, once they’ve reviewed the financial accounts, and demand payment of outstanding dues.

How we can help you
Some taxes are targeted at particular industries, and others get certain reliefs despite the uniform corporate tax rate of 20 per cent for smaller companies and 21 per cent (proposed government change) for larger companies. Different sectors yield different levels of profitability.

Understanding how the tax system works is not required knowledge for a business owner. This is where we can help you take advantage of various options.


Do you want to be more tax efficient?CONTACT US