Corporation Tax rates and allowances

Updated 21 December 2022

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 2023 2022 2021 2020 2019 2018 2017 2016
Small profits rate (companies with profits under £50,000) 19%
Main rate (companies with profits over £250,000) 25%
Main rate (all profits except ring fence profits) 19% 19% 19% 19% 19% 19% 20%
Marginal Relief lower limit £50,000
Marginal Relief upper limit £250,000
Standard fraction 3/200
Special rate for unit trusts and open-ended, investment companies 20% 20% 20% 20% 20% 20% 20% 20%

From 1 April 2023, there is no longer a single Corporation Tax rate for non-ring fence profits.

At the Spring Budget 2021, the government announced that the Corporation Tax main rate for non-ring fence profits would increase to 25% for profits above £250,000.

A small profits rate of 19% was also announced for companies with profits of £50,000 or less.

Companies with profits between £50,000 and £250,000 will pay tax at the main rate, reduced by a marginal relief. This provides a gradual increase in the effective Corporation Tax rate.

For profits from 1 April 2023, use the Marginal Relief calculator to work out how much Marginal Relief you can claim on your Corporation Tax.

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.

For periods up to 31 March 2023, ring fence companies can claim Marginal Relief on profits between £300,000 and £1.5 million. From 1 April 2023, Marginal Relief is available for companies with profits between £50,000 and £250,000.

Rate 2023 2015 to 2022
Small ring fence profits rate
(companies with profits under £50,000)
Main ring fence profits rate
(companies with profits over £250,000)
Small ring fence profits rate
(companies with profits under £300,000)
Main rate ring fence
(companies with profits over £1,500,000)
Ring fence fraction 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 reflect the increase in value of the asset between the time it was acquired and 31 December 2017.

From 1 January 2018, Indexation Allowance is frozen.

If an asset is acquired before 1 January 2018, but disposed of on of after that date, the Indexation Allowance will be calculated using either the:

  • Retail Prices Index
  • factor for December 2017

This is regardless of the date when the asset is disposed of.