Navigating UK Taxes: Corporation Tax

Let’s delve into the intricacies of corporation tax for UK companies.

Rates and Allowances

• The main rate of corporation tax is 25% for the financial year starting April 2024 (previously 25% in the financial year starting April 2023). This rate applies to companies with profits exceeding £250,000.
• For UK resident companies with augmented profits below £50,000, a lower rate of 19% generally applies.
• Companies with profits between £50,000 and £250,000 pay tax at the main rate, reduced by a marginal relief. This gradual increase in the effective corporation tax rate ensures fairness.

Ring Fence Companies

• Some companies, known as ring fence companies, make profits from oil extraction or oil rights in the UK or UK continental shelf.
• For periods up to 31 March 2023, ring fence companies could 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.

Chargeable Gains

• When selling or disposing of a business asset, companies need to pay Corporation Tax on any profits (or ‘chargeable gains’).
• Indexation Allowance rates reflect the increase in asset value between acquisition and 31 December 2017.
• From 1 January 2018, Indexation Allowance is frozen.

Remember, these tax regulations play a crucial role in shaping the financial landscape for UK businesses. If you have further questions or need more details, feel free to ask! 😊📊