Corporation Tax rates

Financial year (from 1 April)                                      2015                        2014

Main rate                                                                          20%                        (21%)

Small profits rate              £0-£300,000                          -                            (20%)

Marginal rate                    £300,001-£1,500,000          -                           (21.25%)

Marginal Relief changes from 1 April 2010
From 1 April 2010 onwards, the terminology used to describe some Corporation Tax rates and reliefs changed. This table reflects the new terminology but for ease the changes are shown below:

• Small Profits Rate - previously Small Companies’ Rate
• Marginal Relief - previously Marginal Small Companies’ Relief
• Standard fraction - previously Marginal Small Companies’ Relief fraction
• Ring fence fraction - previously Marginal Small Companies’ Relief fraction (ring fence profits)

The main rate of Corporation Tax applies when profits (including ring fence profits) are at a rate exceeding £1,500,000, or where there is no claim to another rate, or where another rate does not apply.

Ring fence companies
*For companies with ring fence profits (income and gains from oil extraction activities or oil rights in the UK and UK Continental Shelf) these rates differ. The Small Profits Rate of tax on those profits is 19 per cent and the ring fence fraction is 11/400 for financial years starting 1 April 2010, 2011 and 2012. The main rate is 30 per cent for financial years starting on 1 April 2010, 2011 and 2012.

Corporation Tax on chargeable gains
Indexation Allowance allows for the effects of inflation when calculating the chargeable gains of companies or organisations.

Diverted profits tax

Companies with diverted profits (as defined) arising on or after 1 April 2015, will pay diverted profits tax at 25% on such profits.

Capital allowances

Expenditure on:
Plant and machinery (a)  
Plant and machinery in certain enterprise zones 
Motor cars – CO2 emissions
-          (≤ 95g/km)
≤130g/km (95g/km-130g/km) (a)
>130g/km (130g/km) (a) 
New and unused zero emission goods vehicles
Long life assets/integral features in buildings (a)
Patent rights and know-how (a) (b) 
Mines, oil wells, mineral rights (a) (c)
Research and development 
Energy-saving and water efficient plant and machinery 
Renovation of business premises (disadvantaged areas)

 2015/16        (2014/15)  
18%               (18%)
100%             (100%)
                                                                                 
 -                     (100%)
18%                (18%)
8%                 (8%)
100%             (100%)
8%                 (8%)
25%                (25%)
25%                (25%)
100%              (100%)
100%             (100%)
100%             (100%)

There is a 100% annual investment allowance on the first £500,000 (£250,000 between 1 January 2013 and 31 March 2014) tranche per annum of capital expenditure incurred on or before 31 December 2015, per group of companies or related entities, on plant and machinery including long life assets and integral features, but excluding cars. The limits are subject to complex transitional rules. The allowance reverts to £25,000 from 1 January 2016.

(a)  These allowances are given on a reducing balance basis.
(b)  For expenditure from 1 April 2002 accounting write downs (and not capital allowances) are allowable deductions for tax.   
(c)  Acquisition of mineral deposits and rights qualify for 10% p.a.

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