Corporation tax is the tax on the profits of a limited
company. The tax is determined at the end of each company's
financial year and is due for payment to the Inland Revenue
within 9 months of the year end.
For Corporation Tax, companies have to work out their own tax
liability, pay their tax without prior assessment by the
Inland Revenue and are liable to penalties if they do not
deliver a return by the statutory filing date, normally 12
months after the end of the accounting period.
Current Corporation Tax rates are as follows:
Rates for financial years starting on 1 April
|
|
2008 |
|
|
Small
Companies Rate*
|
21%*
|
21%*
|
|
Small
Companies Rate can be claimed by qualifying
companies with profits at a rate not exceeding
|
£300,000
|
£300,000 |
|
Marginal Small Companies Relief Lower Limit
|
£300,000
|
£300,000 |
|
Marginal Small Companies Relief Upper Limit
|
£1,500,000
|
£1,500,000 |
|
Marginal Small Company Relief (MSCR) Fraction
|
7/400
|
7/400 |
|
Main
rate of Corporation Tax
|
28%*
|
28%* |
|
Special rate for unit trusts and open -
ended investment companies |
20%
|
20% |
The main rate of Corporation Tax applies
when profits (including ring fence profits) are at a rate
exceeding £1,500,000, or where there is no claim to
another rate, or where another rate does not apply.
Budget 2007 announced a staged increase in
the small companies rate of Corporation Tax from 19 per
cent to 20 per cent from April 2007, 21 per cent from
April 2008 and 22 per cent from April 2009. However, the
increase from 21 per cent to 22 per cent from April 2009
has been deferred until April 2010. This deferral was
announced by the Chancellor in his November 2008
Pre-Budget Report and will apply from 1 April 2009.
* For companies with ring fence profits
the small companies' rate of tax on those profits remains
at 19 per cent and the MSCR fraction 11/400 for financial
years starting 1 April 2007, 2008 and 2009, and the main
rate 30 per cent for financial years starting on 1 April
2008 and 2009. Ring fence profits mean the income and
gains from oil extraction activities or oil rights in the
UK and UK Continental Shelf.
|
