What are the UK corporation tax rates?
From April 2023, the UK has two main corporation tax rates. The small profits rate of 19% applies to companies with taxable profits of £50,000 or less. The main rate of 25% applies to profits above £250,000. Companies with profits between £50,000 and £250,000 pay an effective rate between 19% and 25% through marginal relief.
What is marginal relief?
Marginal relief is a taper that gradually increases the effective corporation tax rate from 19% to 25% for profits between £50,000 and £250,000. It prevents a sudden jump in tax at the threshold. The relief is calculated using a specific formula and reduces the standard 25% charge.
What are associated companies?
Associated companies are companies under common control, typically where the same person or group controls more than 50% of each company. If you have associated companies, the £50,000 and £250,000 thresholds are divided by the total number of associated companies, including your own. This can significantly increase your effective tax rate.