National statistics

Background and guidance to interpreting Corporation Tax statistics

Published 23 September 2021

1. Guidance for this publication

This is a National Statistics publication produced by HM Revenue and Customs (HMRC). For more information on National Statistics and governance of statistics produced by public bodies, please visit the UK Statistics Authority website.

The tables in this publication provide breakdowns of Corporation Tax (CT) receipts and CT liabilities by number of companies, income, allowances, deductions, broad industry sector, financial year and Standard Industrial Classification (SIC) category. All statistics relate to the UK. Sub-national geographic breakdowns are available as Official Statistics in a separate publication.

1.1 New and updated statistics in this release and planned improvements

This release includes the CT, Bank Levy and Bank Surcharge receipts figures for the financial year ending 31 March 2021, and the first published CT liability estimates for company accounting periods ending in 1 Apr 2019 to 31 March 2020. Liabilities are gross of company tax credits. These tables are released and updated annually. For CT liability estimates, figures relating to financial years 2014 to 2015 through to 2019 to 2020 have been revised using the latest available data, but no updates have been made to earlier years’ data.

Since CT returns are submitted up to twelve months after the end of an accounting period, there is some delay before the estimates for a relevant year become available.

The next scheduled release is in autumn 2022, which will show CT, Bank Levy and Bank Surcharge receipts figures for 2021 to 2022 and CT liabilities for 2020 to 2021.

Forecasts of future CT receipts are produced and published by the Office for Budget Responsibility, and can be found on their website.

1.2 Who might be interested?

These tables are likely to be of interest to policy makers in government, academics, research bodies and journalists. They may also be useful to individuals or organisations interested in the number of taxpayers and tax liabilities in total, and the distributions of numbers and amounts, for example by industrial sector or by size of liability.

1.3 User engagement

We are committed to providing impartial, high quality statistics that meet our users’ needs. We encourage our users to engage with us so that we can improve our official statistics and identify gaps in the statistics that we produce. For more information, please see the Continuous User Engagement Strategy for HMRC statistics.

If you would like to comment on or enquire about these statistics, please use the statistical contacts named at the end of this section.

All HMRC statistics are accessible from the Statistics at HMRC web page.

1.4 UKSA Assessment

These statistics have been assessed for compliance with the Code of Practice for Official Statistics by the UK Statistics Authority (UKSA). The assessment report is available on the UK Statistics Authority website.

1.5 Contact points

For statistical queries or feedback on this publication, please contact:

• D Pritchard - Receipts
• N Yates - Liabilities
• Email - ct.statistics@hmrc.gov.uk

2. Main points of Corporation Tax

This section explains features of Corporation Tax (CT) that are useful in understanding the statistical tables.

2.1 What is Corporation Tax?

CT is a direct tax charged on the profits made by companies, public corporations and unincorporated associations such as industrial and provident societies, clubs and trade associations. It makes up approximately 9% of the total receipts collected by HMRC.

CT is charged on the profits made in each accounting period, i.e. the period over which the company draws up its accounts. The rates of taxation are set for the financial year from 1 April to 31 March. Where an accounting period straddles 31 March, and so potentially two different tax rates, the company profits are apportioned between the two financial years according to the amount of time that the accounting period covers in each financial year.

Taxable profits for CT include:

• profits from taxable income such as trading profits or investment profits (except dividend income which is taxed differently)
• capital gains – known as ‘chargeable gains’ for CT purposes

Taxable profits for CT purposes often differ from the pre-tax profits in the company accounts. This is partly because the CT regime has a system of capital allowances, which apply instead of depreciation charges for items such as plant and machinery. There are also other allowances, deductions and reliefs that can be applied when calculating the company’s taxable profits. Particularly significant is group relief; companies belonging to a group can surrender their trading losses to offset against the profits of another group member.

2.2 Profits and deductions

For CT purposes, a company’s profits comprise its income and capital gains. Income, whether from trading or investments, is calculated in the same way as for income tax purposes including capital allowances where appropriate. Gains are calculated in the same way as for capital gains tax except that companies have no exempt amount and company gains are not affected by the reforms made in 1998 to capital gains tax.

Capital allowances provide relief, for CT purposes, for the consumption or depreciation of capital assets incurred for the purposes of carrying on a trade. Different types of assets qualify for different rates of allowances.

Capital allowances may be claimed in the year in which they accrue, any unused capital allowances may be carried forward to set against profits in later years. They may also be carried back in the same way as trading losses. Tax credits were introduced in the 1999 Budget, and extended later, to provide enhanced relief for research and development and some other types of expenditure. For some types of expenditure, non-taxpayers can receive a payable tax credit.

A company that makes a trading loss may carry that loss back for 1 year (3 years from 1991 to July 1997) to set against the profits of an earlier accounting period. An unrelieved trading loss can also be carried forward without time limit to set against income from the same trade in a future accounting period.

Deductions are allowed from a company’s total profits for any charges (interest and other payments) it pays and, in the case of an investment company, its management expenses. Since April 1996, “loan relationship” rules have been in force for the treatment of interest and similar payments. A deduction against the tax liability is allowed for income tax deducted at source from interest received (to the extent that it is not used to cover income tax the company itself deducts on interest payments it makes). Double taxation relief for foreign tax is allowed as a deduction against the tax charged on profits.

2.3 Company groups

Certain rules and reliefs apply to companies that operate as a group. A group typically consists of a parent company and a number of subsidiary companies. For two companies to be considered members of the same group for tax purposes, one company has to have at least 75% ownership of the other, or they must both be owned (at least 75%) by a third company. A company that makes a trading loss can surrender that loss as group relief to set against the profits of an equivalent accounting period of another group member. Assets can be transferred between group members without giving rise to a chargeable gain at the time of transfer.

2.4 Tax rates

From 1 April 2015, there has been a unified rate of CT rather than separate main and small profits rates. From 1 April 2017 the rate has been set at 19%.

There was a lower rate of CT for companies with small profits, known as the small profits rate (SPR), formerly the small companies’ rate (SCR). This rate applies when the profits are below a lower limit. Between that limit and an upper limit, the company is taxed at the main rate, but most companies can claim marginal relief to give a smooth progression in the average tax rate from the lower rate to the main rate. Above the upper limit, the main rate applies. The profit limits are restricted for companies associated with one or more other companies according to the number of associated companies to prevent abuse by a company fragmenting into smaller ones.

Different tax rates apply to companies with income and gains from oil and gas and gas extraction or oil rights, known as ‘ring-fence’ companies. These companies are also subject to a Supplementary tax charge on their ring-fenced profits. More information about ring-fence companies and CT statistics can be found on GOV.UK.

A special tax rate applies to unit trusts and open-ended investment companies.

2.5 Payment and assessment arrangements

Companies are required to assess their own CT liabilities on broadly the same principles that underlie income tax self-assessment. However, unlike income tax, the deadline for paying CT is before the deadline for filing the company tax return. The company tax return has to be filed within 12 months after the end of the accounting period.

Companies with taxable profits of more than £1.5 million annually are normally required to pay by Quarterly Instalment Payments (QIPs), where the first instalment becomes due in month 7 of the accounting period. Smaller companies in a group where the total taxable profits across the group are over £1.5 million must also pay under the QIPs system. Groups can set up Group Payment Arrangements whereby one nominated company makes instalment payments on behalf of the group. Smaller companies outside the QIPs regime have to pay CT within 9 months and a day of their accounting period end date.

From the 1st April 2019, a new payment regime has been introduced for ‘very large’ companies which requires their CT payment to be paid four months earlier than previously. A very large company is one whose profits for the accounting period in question are at an annual rate of more than £20 million. More information about this new regime can be found on the information for very large companies section of the GOV.UK website.

From 1 April 2011, companies have to submit their tax returns to HMRC online for accounting periods ending after 31 March 2010. Tax computations and (with a few exceptions) company accounts must be submitted in Inline eXtensible Business Reporting Language (iXBRL) format. CT must also be paid electronically.

2.6 Historical Background

Corporation Tax rates have changed since its introduction in 1965. The table below provides a timeline of these changes.

Date	Corporation Tax changes
1965	CT introduced, with a uniform rate on all profits. An additional charge to income tax was made when profits were distributed.
1973	Small Companies’ Rate (SCR) introduced, with Marginal Relief to smooth the progression between the SCR and the Main Rate. Advance Corporation Tax (ACT) and tax credits (the “partial imputation system”) introduced.
1980s	Substantial reductions in the Main Rate (from 52% to 35%) and the SCR (from 40% to 25%). Reforms to the capital allowances regime.
1990s	Continued reductions in the Main Rate (from 35% to 30%) and the SCR (from 25% to 20%).
October 1993	CT Pay and File system introduced.
2 July 1997	Tax credits on dividends abolished.
1999	ACT abolished. CT Self-Assessment introduced. Quarterly instalment payments (QIPs) introduced for large companies.
1 April 2000	Starting Rate of 10% introduced.
1 April 2002	Starting Rate cut to zero. SCR reduced from 20% to 19%.
1 April 2004	Non-Corporate Distributions Rate (NCDR) introduced on profits distributed to “persons who are not companies”.
1 April 2006	Starting Rate and NCDR replaced by a single rate set at the SCR.
1 April 2007	SCR raised from 19% to 20%.
1 April 2008	Main Rate reduced from 30% to 28%. SCR raised from 20% to 21%
1 April 2011	Main Rate reduced from 28% to 26%. Small Profits Rate (SPR), formerly known as SCR, reduced from 21% to 20%. Introduction of compulsory online filing for Company Tax returns
1 April 2012	Main Rate reduced from 26% to 24%
1 April 2013	Main Rate reduced from 24% to 23%
1 April 2014	Main Rate reduced from 23% to 21%
1 April 2015	Single unified rate of 20% introduced.
1 April 2017	Single unified rate reduced from 20% to 19%

2.7 The Bank Levy

The Bank Levy is an annual charge based on the equity and liabilities reported in year-end balance sheets, for periods of account ending on or after 1 January 2011. The Bank Levy applies to the following:

• UK banks, banking groups and building societies
• Foreign banking groups operating in the UK through permanent establishments or subsidiaries
• UK banks and banking sub-groups in non-banking groups

No charge arises on the first £20 billion of chargeable equity and liabilities of the relevant period, which in practice means that only banks with a large operating presence in the UK pay the Bank Levy.

The Bank Levy is returned to HMRC as part of the supplementary pages to the CT600 company tax return. Liabilities and receipts are recorded on the HMRC COTAX system. All companies subject to the Bank Levy are deemed to be ‘large companies’ for payment purposes and therefore all liabilities are paid as quarterly instalments under the same provisions as CT.

Bank Levy liabilities are excluded from the CT liabilities in this publication.

2.8 The Bank Surcharge

The Bank CT Surcharge, commonly known as the Bank Surcharge, was introduced in The Finance Act (No 2) 2015 to levy a surcharge on the profits of banking companies. From 1 January 2016, Bank surcharge was introduced at a single rate of 8% on chargeable profits over £25 million.

The Bank Surcharge applies to all banking companies and building societies within the scope of the charge to UK CT.

The surcharge profits are calculated on the same basis as for CT but before the offset of losses that arise before the commencement date or from non-banking companies, and before the surrender of group relief from non-banking companies. R&D expenditure credits are excluded from the surcharge. The surcharge also applies to any chargeable profits of a Controlled Foreign Company (CFC) which are apportioned to a banking company.

There is an annual allowance of £25 million available to banking groups or, where a group has only one banking company or the banking company is not in a group to that banking company alone.

The Bank Surcharge is paid alongside a company’s liability to CT. Liabilities and receipts are recorded on the HMRC COTAX system.

HMRC Official Statistics on CT and PAYE receipts from the banking sector is available on GOV.UK.

3. Data sources and methodology

This section explains some key features of CT that are useful in understanding the statistical tables. More information about the data and the quality assurance process can be found in the Background Quality Report.

3.1 Data sources

Receipts

The data for CT receipts and Bank Levy receipts comes mainly from postings recorded on the HMRC COTAX administrative system. These are downloaded every night into databases for analysis the following day.

Receipts figures are subject to ongoing quality assurance and daily scrutiny as part of the HMRC role in monitoring the public sector finances.

Liabilities

The data for CT liabilities comes from CT assessments and returns as recorded on the HMRC COTAX administrative system. For years shown from financial year 2005 to 2006 onwards, data from 100% of companies is used. For more information on how data was used prior to financial year 2005 to 2006 please consult the Corporation Tax Background Quality Report.

The available data for each company is as recorded on the Company Tax Return (CT600) form, including any modifications or additions made in subsequent assessments. The CT600 form contains a systematic record of the company’s CT calculations, starting with its income and chargeable gains and considering any relevant deductions and reliefs.

A large company may trade at many different locations throughout the UK. However, its CT return will be made on behalf of the whole company and linked to its registered office address. A geographical breakdown would show all of the company’s profits and tax liability as originating at the location of the registered office, which does not reflect the company’s actual business activities. Therefore, CT National Statistics are only produced at national level. Statistics showing sub-national breakdowns of tax receipts can be found at the Country and regional public sector finances page of the ONS.

Tables include breakdowns by industrial sectors and divisions, e.g. ‘Agriculture, Forestry and Fishing’ and the classification is based on the UK Standard Industrial Classification (SIC) 2007. Companies do not report their SIC 2007 sector to HMRC as part of their CT return or registration so they have been assigned to a sector based on data from external sources; this is predominantly matching records to the Office for National Statistics’ (ONS) Inter-Departmental Business Register (IDBR) survey, but if it is not possible to match to this, then it is based on information provided by companies to Companies House. Some categories have been amalgamated in order to protect taxpayer confidentiality.

Further information about the IDBR can be found on the Inter-Departmental Business Register page of the ONS website.

Further information about industrial classification by the ONS and by Companies House can be found at the following links:

• the current Standard Industrial Classification (SIC) that’s located on the Office for National Statistics website
• a condensed list of SIC codes on GOV.UK, for providing Companies House with a description of your company’s nature of business

3.2 Methodology

CT returns are allocated to financial years according to the end date of the accounting period. For large companies these end dates are generally 31 December or 31 March in respect of calendar or financial year accounting periods. CT returns are normally due twelve months after the end of an accounting period, and then it takes a further period to capture the data electronically. Allowing for this and late returns, there is some delay before the estimates for a relevant year become available. In this current release, the most recent available estimates for liabilities relate to tax year 2019 to 2020.

For companies where data is not available for a particular year, profits, deductions and tax liabilities are imputed by extrapolation from a recent year’s data. If HMRC has not received data for a company for any year (an inactive case), these companies are excluded prior to the imputation stage. Grossing is then applied to scale up the sample results to represent the entire population.

CT assessments are subject to revision and although the majority of assessments are finalised within two years, there are exceptional cases which can take much longer. Therefore, there is not a specific point when all the CT liabilities for a particular year can be considered as ‘final’.

The statistics are revised each year for the five years before the latest published year. Reasons for changes in liabilities include:

• revisions to the assessment, for example to carry back losses from later years, or because of an HMRC enquiry
• amendments to correct errors in the original assessment
• late submission of the company’s tax return, replacing the imputed figures in the previous release of the statistics

For the calculations necessary to show the profits breakdown by small profits rate, marginal small profits rate and main rate, an average effective tax rate is calculated for each company. This includes companies whose accounting period spans two financial years and/or whose accounting practices mean they can charge certain parts of their activity at the main rate. This calculation is undertaken as part of the database production process by dividing the tax by the profits chargeable across the full company. This effective tax rate is used to classify companies by CT rate, resulting in some companies being counted as ‘small profits rate’ on average even if some parts of their activity would be taxed at the higher rate.

The total CT liability typically decreases from the time of initial publication to the revision in the following year’s publication. Changes in recent years have been up to 2% per year in either direction. These changes were observed in the statistics in recent years. It should not be assumed that the same pattern of changes will apply in future.

3.3 Potential sources of error

For more information regarding the potential sources of error please consult the Background Quality Report.

4. Guidance on specific tables

Table 1

The main points that are useful to understand table 1 are:

• that receipts are gross of company tax credits, information on company tax credits can be found in HMRC’s monthly receipts statistics
• for Onshore CT, the category of ‘Other industrial and commercial’ includes overseas companies
• between 1973 and 1999, Mainstream Corporation Tax (MCT) was the remaining amount of CT payable, after the Advance Corporation Tax (ACT) amount had been set off
• ACT was a component of CT levied on dividend payments and usually payable in the following quarter. ACT was abolished in 1999
• offshore CT quarterly instalments and balancing payments include the supplementary charge in respect of ring fence trades. These values can be found on the Statistics of government revenues from UK oil and gas production webpage of GOV.UK

Table 3

The main points that are useful to understand table 3 are that:

• liabilities figures in table 3 are consistent with those in table 2, although table 2 includes very small amounts of overseas company liabilities within the industrial and commercial category
• it is organised to follow the main stages of the tax assessment
• gross taxable trading profits and other taxable income and capital net gains contribute towards profits chargeable to corporation tax
• trading losses brought forward, charges paid and offset against profits, trading losses set against other income and other deductions are deducted from profits chargeable to Corporation Tax
• charge to Corporation Tax reflects the amount of CT liabilities prior to any reliefs being applied
• Marginal Small Companies Relief, ACT set-off, double taxation relief and Income Tax set off and other non-standard reductions are all deductions from charge to Corporation tax to achieve the amount of CT liabilities

Tables 4 to 6

Additional points that are useful to understand tables 4 to 6 are that:

• a single company may have several different sources of income so trading profit and other income will overlap in tables 4, 5 and 6.
• the ‘number of companies’ represents those with positive income (gross trading income, other income or gains)
• the figures for capital allowances are the amounts that companies claim in the period, less balancing charges
• overall net trading profits will exceed gross trading profit minus capital allowances since, if this subtraction results in a negative value for an individual company, the net trading profits are deemed to be zero and not negative. Losses brought forward are not deducted in arriving at net trading profits. They and losses of the current period, so far as they are allowed, are included in ‘Deductions allowed’
• in relation to rates at which profits are charged, an individual company can pay different rates on the total chargeable profits and so an average across accounting periods is calculated for simplicity
• total tax charge includes a supplementary charge on UK continental shelf profits of oil and gas companies
• figures for Advance Corporation Tax set-off are not shown at industrial sector level in order to protect taxpayer confidentiality
• other reliefs set against tax includes double taxation relief, marginal small companies rate relief, income tax set off and non-standard tax reduction

Table 12

An additional point that is useful to understand table 12 is that:

• Annual Investment Allowance (AIA) includes qualifying expenditure incurred on or after 1 April 2008. Companies in groups are entitled to only a single AIA claim between them in respect of qualifying expenditure.