Corporation Tax Rates, Allowances and Reliefs for 2020/21

Corporation Tax

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Updated on : 10-Dec-2024 06:48 PM GMT | 4 min read

Corporation Tax Rates for 2020/21

Since April 2015, corporation tax rate for company profits is 19% and it is applied on all limited companies situated in UK. Before April 2015, the corporation tax rate you were paying on profit was not fixed and it totally depends upon the size of profits of the company.

Reliefs can be claimed in the form of deductions or tax credits on your corporation tax.

Companies involved in business of oil rights or extraction in UK have different rates for ring fence profits. It is also known as “Ring fence companies”. Such companies can claim marginal relief on profits between £3,00,000 to £1.5 million.

Rates	2014-2019
Small profit rate (Companies having profits below £300000)	19%
Main rate (Companies having profits above £300000)	30%
Ring fence fraction	11/400

If more than one rate applies in your accounting period

In case more than one rate applies in your accounting period, you need to work out the due tax on the basis of days each rate applied. For example – Suppose your company’s accounting period is 1^st January 2019 – 31^st December 2019, you need to pay according to –

The rate for the financial year starting 1^st April 2018 for 90 days (1^st January 2019 – 31^st March 2019)
The rate for the financial year starting from 1^st April 2019 for 275 days (1^st April 2019 – 31^st December 2019)

Corporation Tax Allowances & Reliefs for 2020/21

Anything you or your employees are provided with, by a company for personal use will be treated as a benefit. During the preparation of company’s accounts, you can deduct the cost of running business from your profits before tax.

You cannot deduct certain expenses from the profits while preparing your company’s tax return. For example – Entertaining clients – add this to your profits.

Capital Allowances

You can claim capital allowances in case you buy assets which you are using in your business. For ex – Machinery, equipment, Business vehicles (Lorries, vans, cars)

Other Reliefs

There are certain other reliefs which you can claim are given below –

The patent box – The patent box includes profit made by a company from patented inventions.
R&D Tax Relief
Relief for creative industries (CITR) – It includes company earning profits from Video games, theatre, television, film, animation.
Relief on goodwill and other relevant assets which includes customer relationships and unregistered trademarks.
Disincorporation Relief – It is provided when you close a company and starts a new sole trading or a partnership business (Ordinary business partnership or LLP)
Losses related to capital, terminal and property income.
Trading losses.