Corporation Tax

Rates

The rate of tax depends on the total profits of the company, but marginal relief is available where the profits fall between a lower and upper limit.

Profits 1.4.13-31.3.14 1.4.12-31.3.13
0 - 300,000 20% 20%
over 1.5m 23% 24%

Marginal relief applies to profits between 300,000 and 1.5m giving an effective marginal rate of 23.75% (2012/13: 25%) in this band.

The limits are adjusted for associated companies and for accounting periods of less than 12 months. For example, a company with one associate will pay at the full rate if its profits are above 750,000.

Payment and filing

Companies which do not pay at the full rate settle their CT liability 9 months and a day after the end of the accounting period.

Companies paying the full rate generally make payments on account of CT 6.5 months, 9.5 months, 12.5 months and 15.5 months after the start of a 12 month accounting period, with interest running on any balance due until final settlement of the period's liability.

All companies file returns 12 months after the end of the period.

Substantial shareholdings

Trading companies do not pay tax on disposals of 'substantial shareholdings', which are 10% holdings in other trading companies which have been held for at least 12 months.

Special rules for corporation tax

Certain categories of capital expenditure by companies are treated differently. New expenditure on 'intangible assets', including goodwill, know-how and patent rights, is in general relieved for tax according to the accounting treatment (i.e. depreciation or amortisation).

There are increased allowances for companies which clean up contaminated land or carry out R&D work - the expenditure is uplifted for tax purposes, effectively creating a grant for doing the work. The uplift is 50% for land remediation, 125% for small/medium company R&D, and 30% for large company R&D.

A new 'above the line' tax credit is being introduced for large companies from April 2013.