04: Tax rates

Corporation tax rates are fixed for the financial year ending each 31 March. Where an accounting period straddles this date, the profits are apportioned between the period before an after 31 March.

From 1 April 2007 the corporation tax rates are as follows:

• Companies with profits up to £1.5 million pay 20% on the first £300,000 of profits and 32.5% on the remainder. The 20% rate will increase to 21% from 1 April 2008 and to 22% from 1 Apri 2009.
• Companies with profits of £1.5 million or more pay tax at 30% on all profits. The 30% rate will fall to 28% from 1 April 2008.

If two or more companies are under common ownership or control, the rate bands are divided equally between all the companies. For example, if you own two companies, each company is taxable at the 20% rate on the first £150,000 of profit. The limits are proportionately reduced for periods of less than 12 months.