Company tax rates are as follows:

Corporation Tax Rates for 2025

  • Small Profits Rate (SPR):
    • 19% for companies with profits up to £50,000.
  • Main Rate:
    • 25% for companies with profits above £250,000.
  • Marginal Relief:
    • Companies with profits between £50,001 and £250,000 benefit from marginal relief, effectively creating a graduated tax rate of 26.5% for profits within this range.

Example Calculations:

  1. A company with £85,000 in taxable profit:
    • 19% on the first £50,000 = £9,500.
    • 26.5% on the remaining £35,000 = £9,275.
    • Total tax liability = £18,775.
  2. A company with £250,000 in profits:
    • Tax liability = £62,500 (25%).
  3. A company with £300,000 in profits:
    • Tax liability = £75,000 (25%).

Key Provisions and Adjustments

1. Companies with Short Accounting Periods

Thresholds for the small profits rate and full corporation tax rate are adjusted proportionally for companies with shorter trading periods.

  • Example: For a nine-month accounting period, the lower limit is reduced to £37,500, and the upper limit to £187,500.

2. Reporting Periods Straddling Rate Changes

For accounting periods that overlap with tax year changes, liabilities are time-apportioned. Companies calculate corporation tax separately for the months before and after the tax change.

3. Associated Companies

New rules consider the number of associated companies when determining tax thresholds.

  • Thresholds for SPR and main rates are divided by the total number of associated companies (including the subject company).
  • Example: A company with three associates will reduce its lower and upper limits to £12,500 and £62,500, respectively.

4. Substantial Commercial Interdependence

When companies are associated but not commercially dependent, the relationship is not automatically considered for tax purposes. Dependency is assessed in three areas:

  • Financial Interdependence: One company financially supports another.
  • Economic Interdependence: Shared financial objectives or benefits.
  • Organizational Interdependence: Shared management, workforce, or premises.

Corporation Tax for Ring Fence Companies

Ring fence companies—those profiting from oil or extraction rights in the UK—are subject to distinct tax rules:

  • Small Ring Fence Rate: 19% for profits under £50,000.
  • Main Ring Fence Rate: 30% for profits above £250,000.

Corporation Tax for Global Companies

Corporation tax is levied on:

  • UK-resident companies: Taxed on worldwide profits.
  • Non-resident companies: Taxed on UK-trading profits or gains related to British land.
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