Guidance

Rates and allowances: Corporation Tax

Updated 1 April 2016

Corporation Tax rates

The rate of Corporation Tax you pay depends on how much profit your company makes.

Rates for Corporation Tax years starting 1 April

There are different rates for ring fence companies

Rate 2016 2015 2014 2013
Small profits rate
(companies with profits under £300,000)
- - 20% 20%
Main rate
(companies with profits over £300,000)
- - 21% 23%
Main rate (all profits except ring fence profits) 20% 20% - -
Marginal Relief lower limit - - £300,000 £300,000
Marginal Relief upper limit - - £1,500,000 £1,500,000
Standard fraction - - 1/400 3/400
Special rate for unit trusts and open-ended
investment companies
20% 20% 20% 20%

From 1 April 2015 there is a single Corporation Tax rate of 20% for non-ring fence profits.

Use the Marginal Relief calculator to work out how much Marginal Relief you can claim on your Corporation Tax for profits before 1 April 2015.

At Summer Budget 2015, the government announced legislation setting the Corporation Tax main rate (for all profits except ring fence profits) at 19% for the years starting the 1 April 2017, 2018 and 2019 and at 18% for the year starting 1 April 2020. At Budget 2016, the government announced a further reduction to the Corporation Tax main rate (for all profits except ring fence profits) for the year starting 1 April 2020, setting the rate at 17%.

Ring fence companies

There are different Corporation Tax rates for companies that make profits from oil extraction or oil rights in the UK or UK continental shelf. These are known as ‘ring fence’ companies.

Ring fence companies can claim Marginal Relief on profits between £300,000 and £1.5 million.

Rate 2016 2015 2014 2013
Small profits rate
(companies with profits under £300,000)
19% 19% 19% 19%
Main rate
(companies with profits over £300,000)
30% 30% 30% 30%
Ring fence fraction 11/400 11/400 11/400 11/400

Corporation Tax on chargeable gains

If you sell or dispose of a business asset, you’ll need to pay Corporation Tax on any profits (or ‘chargeable gains’).

When working out your chargeable gain, you can use Indexation Allowance Rates to work out the value of the asset at today’s prices.