Tax Rates & Allowances

Tax Rates & Allowances

Taxes on Corporations

Rates

The corporation tax rates for small and large companies was aligned at 20% from April 2015.. The rates for the three financial years to 31 March 2022 are as follows:

The Corporation Tax main rate for non-ring-fenced profits will be raised to 25% on April 1, 2023, for for-profits over £250,000. A small profit rate (SPR) will be implemented for businesses with profits of £50,000 or less, allowing them to keep paying Corporation Tax at the current rate of 19 percent. Profits between £50,000 and £250,000 will be taxed at the standard rate, with a marginal relief applied.
Small and medium (SME) businesses can claim higher deductions for R&D initiatives worth up to 230 percent of qualifying expenditure. If the deduction is claimed and the firm generates a loss, HMRC will give the company a cash credit of 14.5 percent of the loss.
The RDEC (Research and Development Expenditure Credit) program
Large businesses can claim a 13% tax credit on the following eligible expenses:

• Expenses of personnel
• Expenditure on staff hired from outside sources
• Materials and software
• Independent research contributions
• Individuals/partnerships and subcontractors of eligible bodies

RDEC is different from the former R&D program for large businesses in that it is an 'above the line tax credit that can be accounted for in the profit and loss statement.

Enterprise Zones

Around 53 have been established across the country to promote investment and employment creation. Some of these zones allow businesses to claim 100 percent capital allowances on equipment used within the zone. The three-year term during which those 100 percent allowances are available has been extended until March 31, 2020.

Excessive Deduction

Companies investing in qualifying new plant and machinery assets will be eligible to claim the following benefits from April 1, 2021, to March 31, 2023:

• a capital allowance of 130 percent on qualified plant and machinery investments.
• a 50% first-year allowance for assets that qualify for special rates.