Corporation tax is a tax on the profits of companies. In the UK, the main rate of corporation tax is 25%. However, there are some different rates for certain types of companies and profits.
The Main Rate of Corporation Tax
The main rate of corporation tax is 25% for profits above £250,000. Companies with profits of £50,000 or less pay a small profits rate of 19%. Companies with profits between £50,000 and £250,000 can claim marginal relief, which reduces the amount of corporation tax they pay.
Ring Fence Profits
There is a different rate of corporation tax for ring fence profits. Ring fence profits are the profits of companies involved in oil and gas extraction. The ring fence rate of corporation tax is 30%.
Companies that exploit patents can benefit from a lower rate of corporation tax. The patent box rate is 10%.
Other Rates of Corporation Tax
There are also some other rates of corporation tax for specific types of companies and profits. For example, banks and insurance companies pay a rate of 28%. And companies that make profits from intellectual property pay a rate of 19%.
When Is Corporation Tax Payable?
Corporation tax is payable 9 months and 1 day after the end of the company's accounting period. For example, if a company's accounting period is the calendar year, then corporation tax is payable on 31st March of the following year.
How to Calculate Corporation Tax
To calculate corporation tax, you need to know the company's profits. Profits are calculated by subtracting expenses from revenue. Expenses can include things like rent, salaries, and marketing costs.
Once you know the company's profits, you can apply the relevant rate of corporation tax to calculate the amount of tax payable.
Published: 9/26/2023 4:12:48 PM