What are the Current Corporation Tax Rates?

What are the current corporation tax rates in the UK for the limited companies? You must be a finance professional or working in the capacity of a business owner if you are worried about the current corporation tax rates. Well, you are not alone in this, and we have. got you covered. This guide will not only help you to develop an understanding of the corporation tax rates, but you will also be able to keep a complaint with HMRC and manage your business’s financial health in a better way.

The corporation tax is one of the main expenses for a business or a limited company in the UK. Being aware of the updates and recent tax rates will help to minimise the tax liability and maximise the business profitability for your limited company in the UK. You can be an old, experienced finance professional in the UK or a new business owner, getting to know the basics of corporation tax rates will help you in several aspects. Further in the discussion, we will delve into the world of corporation tax from limited companies and the current tax rates to help you make informed decisions for your business future. So, let us begin the discussion.

 

What are the Current Corporation Tax Rates?

As of 2024-2025, the UK corporation tax rates for limited companies remain unchanged, with two main rates: the Small Profits Rate (SPR) and the Main Rate.

Main Rate

• This applies to companies with profits over £250,000
• Tax rate: 25%
• Applies to larger businesses with higher profits

Small Profits Rate (SPR)

• This applies to companies with profits up to £50,000
• Tax rate: 19%
• Benefits small businesses with lower tax liability

Tax Allowances and Reliefs

• Annual Investment Allowance (AIA): £1 million
• Research and Development (R&D) tax relief: up to 230% of qualifying expenditure
• Small and Medium-sized Enterprise (SME) tax relief

Marginal Relief

• This applies to companies with profits between £50,000 and £250,000
• Gradually increase tax rate from 19% to 25%

Example Calculations

• Company A (small business): £30,000 profit, 19% tax rate, £5,700 tax liability
• Company B (medium-sized business): £150,000 profit, Marginal Relief applies, £29,250 tax liability
• Company C (large business): £500,000 profit, 25% tax rate, £125,000 tax liability

Consider the following in this regard.

• Accounting period: 12 months
• Payment deadlines: 9 months and 1 day after accounting period end
• Filing deadlines: 12 months after the accounting period end

Staying Informed

• Consult HMRC or a tax professional for up-to-date information
• Review tax returns and payments regularly
• Plan for tax efficiency and minimise liability

Impact on Limited Companies

• Small businesses: benefit from lower tax rate
• Medium-sized businesses may benefit from Marginal Relief
• Large businesses: subject to the higher tax rate

How Do Corporation Tax Rates Apply to Limited Companies in the UK (2024-2025)?

To apply corporation tax rates, limited companies must first calculate their taxable profits. This involves:

• Calculating total income from business operations
• Deducting allowable expenses, such as salaries, rent, and utilities
• Claiming capital allowances for equipment and machinery
• Applying research and development tax relief

Calculating Corporation Tax Liability

• Multiply taxable profits by the applicable tax rate
• Consider Marginal Relief for companies with profits between £50,000 and £250,000
• Claim tax allowances and reliefs to reduce tax liability

Applying Corporation Tax Rates

• Small Profits Rate (SPR): 19% (profits up to £50,000)
• Main Rate: 25% (profits over £250,000)
• Marginal Relief: applies to profits between £50,000 and £250,000

Example Calculations

• Company A (small business): £30,000 profit, 19% tax rate, £5,700 tax liability
• Company B (medium-sized business): £150,000 profit, Marginal Relief applies, £29,250 tax liability
• Company C (large business): £500,000 profit, 25% tax rate, £125,000 tax liability

 

The Bottom Line

In conclusion, it is clear what are the current corporation tax rates for limited companies in the UK. You will be working better for the. Business success plan if you’re aware of the corporation tax obligations. Once all the types of corporation tax are relevant, rates are grasped, and the management of the financial health and business growth will be boosted for a better future.

However, the limited companies must also focus on maintaining accurate records to keep compliance with HMRC and away from a hefty amount of fines and other penalties. You can plan for tax efficiency and manage to claim the allowances and reliefs with improved confidence. By following the steps and tricks mentioned in his discussion above, you will be able to better handle all the complexities of your tax obligations. So gear up today and take control of your financial management and tax. Obligations to shine bright in the future.

Disclaimer: The information about current corporation tax rates is provided in this article including text and graphics. It does not intend to disregard any of the professional advice.