Rates and Thresholds
A list of rates and thresholds for UK corporation tax from 1971. From 2015 differential rates of tax for small and large profits respectively were scrapped. Profits of all sizes are now taxed at the same rate.
Forecasting Corporation Tax
These rates are the ones used by Figurewizard to calculate the forecast corporation tax charge once it has calculated the taxable profit forecast.
UK Corporation Tax Rates and Thresholds from 1971
| From April 1st. | Starting Profit Limit | Small Rate Profit Limit | Starting Rate of Tax | Small Profit Rate of Tax | Standard Rate of Tax |
| 1971 | - | - | - | 40% | 40% |
| 1972 | - | - | - | 40% | 40% |
| 1973 | - | 25,000 | - | 42% | 52% |
| 1974 | - | 25,000 | - | 42% | 52% |
| 1975 | - | 30,000 | - | 42% | 52% |
| 1976 | - | 40,000 | - | 42% | 52% |
| 1977 | - | 50,000 | - | 42% | 52% |
| 1978 | - | 60,000 | - | 42% | 52% |
| 1979 | - | 70,000 | - | 40% | 52% |
| 1980 | - | 80,000 | - | 40% | 52% |
| 1981 | - | 90.000 | - | 40% | 52% |
| 1982 | - | 100,000 | - | 38% | 52% |
| 1983 | - | 100,000 | - | 30% | 50% |
| 1984 | - | 100,000 | - | 30% | 45% |
| 1985 | - | 100,000 | - | 30% | 40% |
| 1986 | - | 100,000 | - | 29% | 35% |
| 1987 | - | 100,000 | - | 27% | 35% |
| 1988 | - | 100,000 | - | 25% | 35% |
| 1989 | - | 150,000 | - | 25% | 35% |
| 1990 | - | 200,000 | - | 25% | 34% |
| 1991 | - | 250,000 | - | 25% | 33% |
| 1992 | - | 250,000 | - | 25% | 33% |
| 1993 | - | 250,000 | - | 25% | 33% |
| 1994 | - | 300,000 | - | 25% | 33% |
| 1995 | - | 300,000 | - | 25% | 33% |
| 1996 | - | 300,000 | - | 24% | 33% |
| 1997 | - | 300,000 | - | 21% | 31% |
| 1998 | - | 300,000 | - | 21% | 31% |
| 1999 | - | 300,000 | - | 20% | 30% |
| 2000 | 10,000 | 300,000 | 10% | 20% | 30% |
| 2001 | 10,000 | 300,000 | 10% | 20% | 30% |
| 2002 | 10,000 | 300,000 | 0% | 19% | 30% |
| 2003 | 10,000 | 300,000 | 0% | 19% | 30% |
| 2004 | 10,000 | 300,000 | 0% | 19% | 30% |
| 2005 | 10,000 | 300,000 | 0% | 19% | 30% |
| 2006 | - | 300,000 | - | 19% | 30% |
| 2007 | - | 300,000 | - | 20% | 30% |
| 2008 | - | 300,000 | - | 21% | 28% |
| 2009 | - | 300,000 | - | 21% | 28% |
| 2010 | - | 300,000 | - | 21% | 28% |
| 2011 | - | 300,000 | - | 20% | 26% |
| 2012 | - | 300,000 | - | 20% | 24% |
| 2013 | - | 300,000 | - | 20% | 23% |
| 2014 | - | 300,000 | - | 20% | 21% |
| 2015 | - | N/A | - | 20% | 20% |
| 2016 | - | N/A | - | 20% | 20% |
| 2017 | - | N/A | - | 19% | 19% |
| 2018 | - | N/A | - | 19% | 19% |
| 2019 | - | N/A | - | 19% | 19% |
| 2020 | - | N/A | - | 17% |
Corporation Tax Payable from 2005
The rate of tax is not the only factor to determine the size of the corporation tax bill. For example first year capital allowances which have fluctuated wildly in recent years make a significant difference when calculating taxable profits.
The principal fixed assets of any business will be what are known as main pool assets. These include plant & machinery, office equipment, fixtures, fittings and furnishings and commercial vehicles (but not company cars).
They attract a 100% first year allowance up to an annual upper limit which has been relatively high for some years (e.g. £200,000 in 2018). It is therefore likely that the average SME will have regularly written all of them off against taxable profit in their first years of ownership.
Examples of this can then be viewed in detail showing step-by-step calculations in the screen for the corporation tax forecast to arrive at the final figure for corporation tax payable as shown in the profit and loss forecast.
0% Starting Rate of Corporation Tax
Introduced in 2000 the "starting" rate of tax was principally targeted at small start up enterprises.
The 0% rate for taxable profits not greater than £10,000 was a constructive concession for such businesses; enabling them to retain working capital and net cash flows in order to support expansion. Despite its importance in seeding new business activity and jobs the then Chancellor Gordon Brown unaccountably scrapped this from 2005.
Marginal Relief
Up to 2015 a company with taxable profits that were greater than £300,000 and not more than £1,500,000 were entitled to claim additional tax relief by way of marginal relief. As corporation tax for all company profits regardless of size is now unified, marginal relief now no longer applies.
In his 2016 Autumn budget Chancellor Phillip Hammond retained the projected rates of corporation tax previously announced by George Osborne - e.g. The tax will be reduced to 17% by 2020.
This commitment to the new unified tax rate was reaffirmed in the Spring budget of March 2017.
what were the starting rates of corporation tax. were these only for start ups.
The "starting rate" of corporation tax applied to all companies with taxable profits not exceeding £10,000. It was certainly a very useful concession to allow many start up and young businesses to invest in growth but was inexplicably scrapped in 2005.
I have run forecasts using Figurewizard and the profit and loss account is showing corporation tax deducted as being 17.7% of net profit instead of 20%. Why is that?
Have you checked the corporation tax calculation page? This shows how your net profit is turned into a taxable profit by adding back provisions such as depreciation and most importantly reducing your tax liability with the application of annual investment allowances (AIA) and Capital allowances.
Hi, we're looking at Figure Wizard as an alternative to out current forecasting software - we have a couple of clients where not all the turnover is subject to corporation tax, some of it is considered non trading. Can Figure Wizard cope with this? Is there a way to stop it applying corporation tax to some of the profits? Thanks
Presumably you are referring to investments that are unconnected with your clients' trading. Figurewizard is only concerned with enabling its users to forecast profits, cash flow and so on from their trading. Corporation tax is levied on all profits though and in the case of profits from investments unconnected with trading (e.g. interest receivable) it is payable even if the company has recorded a loss in its financial year / period. Corporation tax is not levied on "turnover" by the way.
Why doesn't the UK lower the corporate tax to 0% and help show the rest of the world the way to increased prosperity and economic freedom? Most people don't realize that the company tax is just a type of individual tax. All companies are owned by individuals; thus all company taxes are ultimately paid by individuals. It's that simple. The problem with this type of individual tax is that in this competitive world corporate taxes are a disincentive for a company to locate jobs in a place. Jobs not only provide income but pay a whole range of taxes. For the couple cents on the GDP dollar that corporate taxes generate, we're being incredibly penny-wise but pound foolish. Eliminate corporate taxes entirely and let the money flow on to individuals where it will be taxed. We in western economies have got to stop scaring away our golden geese.
Before scrapping corporation tax I would like to see the employer's contribution (I use the word contribution lightly) to national insurance go. It is nothing more than a tax on jobs.
I'm very impressed by the way figurewizard can accurately calculate taxable profits and corporation tax simply from my predictions for sales and so on. How do you do it?