Corporation tax is the amount payable on profits made by limited companies. These profits can be from doing business, asset disposal and investments. This tax represents a substantial part of your trading costs. Moreover, the increased reporting obligations, robust investigation policies on the part of the tax authorities, and harsh penalties for non-compliance mean that an undue amount of your time and resources can be taken up collecting revenue for the Government.
Your corporation tax becomes payable 9 months and 1 day after the end of your accounting year, and even if you have no payments to make, you must still notify HM Revenue and Customs of this by completing the nil to pay form, or sending back the payslip on the reminder sent to you, marked nil return.
Also note that you are still required to complete a company tax return, whether you pay corporation tax for that period or not.
Efficient corporate tax planning can result in potentially significant improvements in your bottom line.
Corporation Tax Rates 2020/21
Your corporation tax rate depends on your company profits for the year. There are also different rates for ring fence companies (companies which make profits from oil extraction or oil rights in the UK or the UK continental shelf).
Ring Fence Corporation Tax Rates 2020
Ring fence companies can also claim Marginal Relief on any profits between £300,000 and £1,500,000.
- Small profits rate (companies with profits under £300,000) – 19%
- Main rate (companies with profits over £300,000) – 30%
- Ring fence fraction – 11/400
How much is corporation tax for a limited company?
From 1 April 2015 there is a single Corporation Tax rate of 19% for non-ring fence profits.
Main rate
This includes all profits, excluding ring fence profits.
Year |
Rate |
|
2014 |
– |
|
2015 |
20% |
|
2016 |
20% |
|
2017 |
19% |
|
2018 |
19% |
|
2019 |
19% |
|
2020 |
19% |
Special rates
For unit trusts and open-ended investment companies.
Year |
Rate |
|
2014 |
20% |
|
2015 |
20% |
|
2016 |
20% |
|
2017 |
20% |
|
2018 |
20% |
|
2019 |
20% |
|
2020 |
20% |
Historical Corporation Tax figures
Before 1 April 2015, corporation tax was split into small and large rates. These rates have been unified.
Small profits rate
This applied to companies with profits under £300,000.
Year |
Rate |
|
2014 |
20% |
|
2015 |
– |
|
2016 |
– |
|
2017 |
– |
|
2018 |
– |
|
2019 |
– |
|
2020 |
– |
Main rate
This applied to companies with profits over £300,000.
Year |
Rate |
|
2014 |
21% |
|
2015 |
– |
|
2016 |
– |
|
2017 |
– |
|
2018 |
– |
|
2019 |
– |
|
2020 |
– |
Marginal Relief
Before the tax rates were unified in 2015, Marginal Relief provided a gradual increase in Corporation Tax rate between the small profits rate and the main rate. It applied where the company profit exceeded the lower limit but did not exceed the upper limit.
Marginal Relief lower limit
Year |
Rate |
|
2014 |
£300,000 |
|
2015 |
– |
|
2016 |
– |
|
2017 |
– |
|
2018 |
– |
|
2019 |
– |
|
2020 |
– |
Marginal Relief upper limit
Year |
Rate |
|
2014 |
£1,500,000 |
|
2015 |
– |
|
2016 |
– |
|
2017 |
– |
|
2018 |
– |
|
2019 |
– |
|
2020 |
– |
Standard fraction
The standard fraction is a figure used when calculating Marginal Relief.
HMRC have a useful calculator that shows you how much marginal relief you can claim on your Corporation Tax. All you need are your taxable profit figures, and the accounting date of your company.
Year |
Rate |
|
2014 |
1/400 |
|
2015 |
– |
|
2016 |
– |
|
2017 |
– |
|
2018 |
– |
|
2019 |
– |
|
2020 |
– |
Our offering
We offer corporation tax services and offer a range of services to help you minimise your corporation tax exposure and relieve you of the administrative burden of complying with tax legislation. These include:
- Determining the most tax effective structure for your business. This includes shareholder structuring, as well as structuring payments between salary and dividends.
- Taking full advantage of tax opportunities and reliefs, such as ensuring you claim for all eligible expenses and entrepreneur’s relief upon closing the company.
- Achieving the optimum capital or revenue tax treatment, ensuring you stay at basic rate thresholds and pay as little tax as possible over the company’s lifetime.
- Reducing tax on disposals and maximising relief on acquisitions.
- Making the most of tax opportunities specific to your industry, such as the use of the Flat Rate VAT Scheme.
- Meeting the rigorous demands of compliance including corporation tax self-assessment, the preparation of annual accounts, VAT, PAYE returns and Self-Assessment Tax Returns.
- Acting on your behalf in discussions with the tax authorities. If you grant us Agent Authorisation, we can save you hours of time on the line with HMRC to resolve issues or request documents.
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