Corporation Tax rates

Business: Business Tax

    Your Corporation Tax rate depends on how much profit your company makes and may change on 1 April each year.

    RateFrom 1 April 2011From 1 April 2012From 1 April 2013From 1 April 2014
    Profits £300,000 or less (‘small profits’ rate)20%20%20%20%
    Profits above £300,000 (‘main’ rate)26%24%23%21%

    Profits below £1.5 million

    You can claim ‘Marginal Relief’ on your company’s profits between £300,000 and £1.5 million.

    If you claim it, the Corporation Tax rate your company pays on profits between £300,000 and £1.5 million effectively rises gradually from the ‘small profits’ rate to the ‘main rate’.

    Work out your company’’s Corporation Tax using HM Revenue and Customs’ (HMRC) Marginal Relief calculator.

    You claim Marginal Relief when you send your Company Tax Return to HMRC.

    Profits above £1.5 million

    Your company pays the ‘main’ rate on all its profits if they’re more than £1.5 million.

    If your accounting period involves a change of Corporation Tax rate

    Work out how many days each rate applied, then work out the tax due for each.

    For example, if your accounting period is 1 March 2012 to 28 February 2013, you pay:

    • the rate for the financial year starting 1 April 2011 for 31 days (1 March to 31 March)
    • the rate for the financial year staring 1 April 2012 for 334 days (from 1 April to 28 February)

    If your accounting period is shorter than 12 months

    The thresholds of £300,000 and £1.5 million are for a whole year, so these are reduced in line with your accounting period. For example, if your accounting period is 6 months, the £300,000 threshold is halved to £150,000.

    Associated companies

    Associated companies (where one company controls others) share thresholds. For example, if 1 company owns 5 others, divide the thresholds by 6 when working out the Corporation Tax for each company.

    Ring fence companies

    There are different rates for ring fence companies (companies involved in oil extraction or oil rights in the UK or UK continental shelf).

    Your Corporation Tax rate depends on how much profit your company makes and may change on 1 April each year