Corporation Tax

Corporation Tax is payable by limited companies based in the UK and other organizations, such as clubs, societies, association, cooperatives and charities on their taxable profits including:

  1. trading and investment profits (except dividends which are taxed differently)
  2. capital gains – known as ‘chargeable gains’ for Corporation Tax purposes
Corporation Tax rates
Rates for financial years starting on 1 April:
Rate Taxable Profit 2009 2010 2011
Small Profits Rate – previously Small Companies Rate. Small Profits Rate can be claimed by qualifying companies with profits at a rate of: below £300,000 21%¹ 21%¹ 20%¹‚³
Marginal Relief Lower Limit – Marginal Relief Upper Limit £300,001 – £1,500,000 21% – 28% 21% – 27%
Standard fraction 7/400
Main rate of Corporation Tax² above £1,500,000 28% 28% 27%
 Special rate for unit trusts and open-ended investment companies   20%  20%  20%

 

¹ These rates differ for companies with ring fence profits (income and gains from oil extraction activities or oil rights in the UK and UK Continental Shelf). The Small Profits Rate is 19 per cent and the ring fence fraction is 11/400 for financial years starting 1 April 2008, 2009 and 2010. The main rate is 30 per cent for financial years starting on 1 April 2009, 2010 and 2011.

 

² The main rate of Corporation Tax applies when profits (including ring fence profits) are above £1,500,000, or where there is no claim to another rate, or where another rate does not apply.

 

According to the Emergency Budget of 22 June 2010:

 

³  The small profits corporation tax rate will be reduced to 20 per cent from 1 April 2011

 

4 The main corporation tax will fall to 27 per cent from 1 April 2011 and be reduced by 1 per cent per year in the following three years.