Corporation Tax Rates and Reductions
Corporate tax rate
The rate of corporation tax you pay depends on the profits made by your business.
Rates for corporate tax years beginning April 1
There are different rates for circular fence companies.
| Rate | 2021 | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 | 2014 |
|---|---|---|---|---|---|---|---|---|
| Small rate of profit (companies with profits under £300,000) |
– | – | – | – | – | – | – | 20% |
| Main tariff (companies with profits over £300,000) |
– | – | – | – | – | – | – | 21% |
| Principal rate (all profits except ring fence profits) | 19% | 19% | 19% | 19% | 19% | 20% | 20% | – |
|
Lower limit of marginal exemption |
– | – | – | – | – | – | – | £300,000 |
| Upper limit of marginal exemption | – | – | – | – | – | – | – | £1,500,000 |
| standard fraction | – | – | – | – | – | – | – | 1/400 |
| Special rate for mutual funds and open funds investment companies |
20% | 20% | 20% | 20% | 20% | 20% | 20% | 20% |
Since April 1, 2015, there is a single corporate tax rate for non-closing profits.
For profits before April 1, 2015, use the marginal relief calculator to determine the amount of marginal relief you can claim on your corporation tax.
In the 2015 summer budget, the government announced legislation setting the main corporate tax rate (on all profits except closing profits) at 19% for years beginning April 1 2017, 2018 and 2019 and 18% for the year beginning April 1, 2020. A further reduction to 17% for the year beginning April 1, 2020 was announced in Budget 2016.
In Budget 2020, the government announced that the main corporate tax rate (for all profits except closing profits) for the years beginning April 1, 2020 and 2021 would remain at 19%.
Circular fence companies
There are different corporation tax rates for companies that derive profits from oil extraction or oil rights in the UK or on the UK continental shelf. These are known as “ring fence” companies.
Closing companies can apply for marginal relief on profits of between £300,000 and £1.5 million.
| Rate | 2014 to 2021 |
|---|---|
| Small rate of profit (companies with profits under £300,000) |
19% |
| Main tariff (companies with profits over £300,000) |
30% |
| Ring fence fraction | 11/400 |
Corporation tax on taxable capital gains
If you sell or dispose of a business asset, you will have to pay corporation tax on any profits (or “taxable gains”).
When calculating your taxable capital gain, you can use the indexing allowance rates to reflect the increase in value of the asset between the time it was acquired and December 31, 2017. From 1 January 2018, the indexation allowance is frozen. Where assets acquired before January 1, 2018 are disposed of on or after that date, the indexation deduction will be calculated using the December 2017 retail price index or factor, regardless of the date of disposal of the asset.
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