As of April 2025, the UK Corporation Tax rates remain consistent with the previous year. However, it’s crucial for small business owners to understand how these rates apply to their specific situations. Here’s a breakdown:
📊 Corporation Tax Rates for 2025-26
- Small Profits Rate (19%): Applies to companies with profits up to £50,000.
- Main Rate (25%): Applies to companies with profits over £250,000.
- Marginal Relief: For companies with profits between £50,001 and £250,000, a tapered relief is available, gradually increasing the effective tax rate from 19% to 25%.
It’s important to note that these thresholds are adjusted if your company has associated companies. In such cases, the £50,000 and £250,000 limits are divided by the total number of associated companies.
🧮 Understanding Marginal Relief
Marginal Relief provides a gradual increase in the Corporation Tax rate for companies whose profits fall between the small profits rate and the main rate thresholds. This ensures a smooth transition between the two rates.
⚠️ Additional Considerations for Small Businesses
- Associated Companies: If your company is part of a group or has associated companies, the profit thresholds for tax rates are divided by the number of associated companies.
- Filing Requirements: Even if your company has no tax to pay, you’re still required to file a Corporation Tax return (CT600) if HMRC has asked you to. Failure to do so can result in penalties.
- Payment Deadlines: Corporation Tax is due 9 months and 1 day after the end of your accounting period. Late payments may incur interest charges.
📅 Key Dates to Remember
- 31 January 2025: Deadline for paying the balance of any tax for the year 2023-24.
- 6 April 2025: Start of the new tax year 2025-26.
- 31 October 2025: Deadline for paper filing of self-assessment tax returns for the year 2024-25.
- 31 January 2026: Deadline for online filing of self-assessment tax returns and payment of tax for the year 2024-25.
✅ Action Steps for Small Business Owners
- Review Profit Levels: Assess your company’s profits to determine the applicable Corporation Tax rate.
- Calculate Marginal Relief: If your profits fall between £50,001 and £250,000, use the HMRC calculator to determine your exact tax liability.
- Consider Associated Companies: If applicable, adjust your profit thresholds based on the number of associated companies.
- Ensure Timely Filing and Payment: Avoid penalties by adhering to filing and payment deadlines.
- Consult a Tax Professional: For personalized advice, consider consulting with a tax advisor or accountant.
Staying informed about Corporation Tax rates and requirements is essential for the financial health of your business. By understanding and complying with these regulations, you can ensure your company remains in good standing with HMRC.
