Corporation tax is a tax that is paid by businesses on their profits. In the UK, the main rate of corporation tax is 25%. However, there is a lower rate of 19% for small businesses that make a profit of £50,000 or less.
Here are some of the key things to know about corporation tax for small businesses in the UK:
You must register for corporation tax if your business is a limited company.
You must pay corporation tax on your profits for the financial year.
You can claim a number of reliefs and allowances to reduce your corporation tax bill.
You must file a corporation tax return by the deadline.
Here are some of the reliefs and allowances that are available to small businesses:
Capital allowances: You can claim capital allowances on the cost of certain assets, such as plant and machinery. This means that you can deduct the cost of the assets from your profits before you pay tax.
Research and development (R&D) tax credits: You can claim R&D tax credits if your business carries out R&D activities. This can help to offset the costs of R&D.
Start-up relief: If your business is a new business, you may be eligible for start-up relief. This means that you can pay corporation tax at a reduced rate for the first two years of trading.
If you are a small business, it is important to understand the basics of corporation tax. You should also speak to a tax advisor if you have any questions about your corporation tax liability.
Here are some additional things to keep in mind about corporation tax for small businesses in the UK:
The corporation tax rate is set to increase to 26% in 2025.
There are a number of other taxes that businesses may have to pay, such as VAT and income tax.
Businesses can claim certain expenses against their corporation tax liability, such as business travel expenses and office costs.
Businesses must keep accurate records of their income and expenses to calculate their corporation tax liability.
If you are a small business owner, it is important to understand your tax obligations. You should speak to a tax advisor if you need help to comply with the law.