Introduction to Corporation Tax

There are two rates of corporation tax and one effective marginal rate, as follows:

(The existence of marginal rate relief accounts for the apparent anomaly of the lower band seeming to be taxed more than the band above.)

At first sight these appear to be lower than personal tax rates but remember further personal tax becomes payable when extracting profits from a limited company. The lower rates reflect the government’s aim to encourage companies to expand and invest.

Self Assessment

As with individuals and partnerships, companies have to work out their own tax liability and pay it without prompting from the Inland Revenue