skip to navigationskip to main content

Tax Rates & Allowances

Back to Tax Rates & Allowances

Corporation Tax

Rates

The rates for the three financial years from 1 April  2021 are as follows:

Year beginning 1 April: 2021 2022 2023 2024
Corporate Tax main rate  19% 19% 25% 25%
Corporate Tax small profits rate N/A N/A 19% 19%
Marginal relief lower profit limit N/A N/A £50,000 £50,000
Marginal relief upper profit limit N/A N/A £250,000 £250,000
Standard fraction N/A N/A 3/200 3/200
Main rate (all profits except ring fence profits) 19% 19% N/A N/A

From 1 April 2023, the Corporation Tax main rate applies to profits over £250,000, and the small profits rate applies to profits of up to £50,000. Those thresholds are divided by the number of associated companies carrying on a trade or business for all or part of the accounting period.   Companies with profits between £50,000 and £250,000 pay tax at the main rate reduced by a marginal relief determined by the standard fraction and this formula:

formula

Where:

F = standard fraction

U = upper limit

A = amount of the augmented profits

N =amount of the taxable total profits 

For companies with ring fence profits from oil or gas related activities, the main rate is 30%, and the small profits rate is 19%, with a ring fence fraction of 11/400, for all financial years from 2008.

Research and Development (R&D)

Small and medium (SME) companies can claim enhanced deductions for expenditure on R&D projects at 186% (230% before April 2023) of qualifying expenditure. Where the deduction is claimed and the company makes a loss, it can claim a cash credit from HMRC of 10% of that loss from 1 April 2023, previously 14.5%.  Where the SME spends at least 40% of their total expenditure on qualifying R&D from 1 April 2023, it can claim the higher payable tax credit of 14.5%.   

Each R&D project must be carried on in a field of science or technology and be undertaken with an aim of extending knowledge in a field of science or technology.

Research and Development Expenditure Credit (RDEC) scheme

Large companies can claim an extra 20% deduction from 1 April 2023 on the following qualifying expenditure:

  • Staffing costs
  • Expenditure on externally provided workers
  • Software and materials consumed or transformed
  • Utilities but not rent
  • Payments to clinical volunteers
  • Subcontractors of qualifying bodies and individuals/partnerships

For staff working directly on the R&D project, you can claim for the following costs, as long as they relate to R&D:

  • Bonuses
  • Salaries
  • Wages
  • Pension fund contributions
  • Secondary Class 1 National Insurance contributions paid by the company

RDEC differs from the previous R&D scheme for large companies as it is an 'above the line' tax credit and can be accounted for in the profit/loss statement.

WE'RE DEDICATED

We provide a professional service to our clients where communication is at the heart of our approach. Our clients know that we do not operate under the normal 9 to 5 rules meaning clients are free to contact us at a time which is convenient to them without any premium charge.

SIGN UP FOR OUR
MONTHLY
NEWSLETTER

You can start taking advantage of our services
right away by signing up for your free newsletter.
All the latest tax news and HMRC changes.

You can start taking advantage of our services right away by signing up for your free newsletter. All the latest tax news and HMRC changes.

Please read our before signing up