Small Business Corporation Tax

These are the rates of UK corporation tax for small company profits for tax years 2013 and 2014 including rates of marginal relief.

Corporation Tax Rates 2013 - 2015

Up to 2016 there were two rates of corporation tax; one for small and another for main profits. The rates were as follows:

Taxable Profit Threshold and Rates 2013 / 2014 2014 / 2015
Small Profits - To a maximum of £1,500,000 £1,500,000
Small Profits Rate 20% 23%
Main Profits Rate 20% 21%

Marginal Relief

Small company profits that were greater than £300,000 up to the maximum of £1,500,000 qualify for additional tax relief. This was marginal relief which was calculated by deducting the taxable profit from an upper llimit of £1,500,000 and then applying the marginal relief fraction as follows:

Thresholds 2013 / 2014 2014 / 2015
Minimum - Profits greater than £300,000 £300,000
Maximum - At or below £1,500,000 £1,500,000
Fraction - Divide by 400 400
Fraction - Multiply by 3 1

How to Calculate Marginal Relief

A business with a taxable profit of £400,000 in 2013/2014 would first have deducted that from the upper marginal relief threshold of £1,500,000 (i.e. £1,100,000).

That would then have been divided by 400 (i.e. £2,750) and multiplied by 3 (i.e. £8,250) which is then set off against the taxable profit.

There are two links below. The first will take you to an historical list of corporation tax rate, the second to a working example showing exactly how Figurewizard calculates forecasts for taxable profits and corporation tax before applying them to forecast profits and cash flows.

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