Corporation Tax

The corporate tax rate for company profits in UK is set at 20% and are paid at the rates that are applied to the company accounting period for Corporation Tax.

The rates for “ring fence” profits are quite different for companies involved in oil extraction and sale in the UK and UK continental shelf.

In some cases reliefs can be claimed on corporate taxes.

There has been a slight change on the tax rates for profits in the last three years:

Your profits From 1 April 2015 From 1 April 2014 From 1 April 2013
£300,000 or less 20% 20% 20%
Above £300,000 20% 21% 23%

Marginal relief can be claimed in case if you had profits between £300,000-£1.5 million before 1st of April 2015 in order to reduce corporation tax.

If the accounting period is shorter than 12 months the threshold is reduced to match the accounting period. For example, if you have made £300,000 in profits over an accounting period of 6 months the threshold is halved. In case of associated companies the tax threshold is shared.

Allowances and Reliefs

While preparing company accounts the cost of running the business can be deducted from the profits. Whatever is used personally by the employer or the employee must be treated as benefit. Several expenses cannot be authorized under the corporate tax, such as client entertainment, these need to be added back into the profits when preparing company tax return forms.

Capital Allowance

Capital allowance can be claimed if assets used in business are bought. This includes:

  • Equipment
  • Machinery
  • Vehicles

Other reliefs include:

  • Research and Development Relief
  • Patent Box
  • Creative Industry Reliefs if the company profits from media
  • Disincorporation relief in case if the company becomes a sole trader, limited partnership or business partnership.

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