Corporation Tax Rates
What is Corporation Tax?
Corporation tax is a tax on a company’s profits. The tax is calculated at the end of every financial accounting year and must be paid to the Inland Revenue within 9 months of your financial year end.
A company is usually responsible for determining their own corporation tax which is submitted via a self-assessment form. This form must be submitted at within 12 months of your financial year end to avoid penalty.
If you are not trading as a limited company, you do not have to pay corporation tax. However, you should confirm this with the Inland Revenue as some non-limited businesses are liable to pay such tax.
Below are the current Corporation Tax rates. If a company is part of a group or has associated companies, the profits limits may be reduced (consult the Inland Revenue for more information).
See Below for Rates Chart
Corporation Tax Rates 2008/09
| Starting rate zero | Not available since
31st March 2006 |
| Marginal starting rate relief | Not available since
31st March 2006 |
| Small companies rate 20%
(up from 19% in 2006) |
£1 – 300,000 |
| Marginal relief * | £300,001 – 1,500,000 |
| Main rate 30% | £1,500,000 or more |
* Marginal relief eases the transition from the small companies’ rate for companies with profits between £300,001 and £1,500,000. The fraction used in the calculation of this marginal relief will be 1/40.
What Records do I Need
In order for you to calculate your corporation tax, you must keep a record of your income and expenditure: this will require you to keep bills, invoices, receipts, etc so that you can prove any figures that you state. You should keep all records for a period of 5 years after submitting your corporation tax figure to the Inland Revenue.
Calculating Corporation Tax
Using the above table, you should calculate your corporation tax by corresponding your profit figure with the relevant tax rate: for most small businesses, this figure is likely to be below £300,000 and is therefore subject to 20% tax.
It should be noted that profits below £10,000 are no longer (since 31st March 2006) free from Corporation tax.
The Inland Revenue have a Corporation Tax calculator that will give you an estimate of the tax that you need to pay.
Late Payment Interest
The Inland Revenue charge interest on the late payment of Corporati on Tax. Visit their
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