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What Tax Does a Company Pay

The 2018/19 corporation tax rate is 19%. However, there is currently a downward trend for future corporation tax rates in the UK and further progressive cuts to 17% by 2020 have been announced.

WHAT TAX DOES A COMPANY PAY?

Corporation tax is what a company pays on profit it makes from:
  • doing business (‘trading profits’)
  • investment income and gains (covered in this brochure)
  • selling assets for more than they cost (‘chargeable gains’)

If the company is based in the UK, it pays corporation tax on all its profits from the UK and abroad.

There has been a steady fall in corporation tax rates which companies pay on any taxable profits. Corporation tax (main rate) was reduced:

  • from 28% to 26% in the 2011/12 tax year
  • to 24% in 2012/13
  • to 23% in 2013/14
  • to 21% in 2014/15
  • to 20% regardless of the size of company in 2015/16
  • to 19% in 2017/18

Corporation Tax rates have been steadily falling over many years, the headline rate of corporation tax being the tax due on company profits for the given accounting period. Corporate investors should be encouraged by this to consider investing any excess money (rather than holding it on deposit) as they can now expect to pay reduced rates of corporation tax on future investment gains.

CURRENT UK CORPORATION TAX LAWS AND TRENDS

Recent year-on-year reduction in corporation tax now makes investing surplus cash more attractive.

Guide to Company Owned Investments Download
Disclaimers:

The value of investments and the income they produce can fall as well as rise, you may get back less than you invested.

Tax treatment varies according to individual circumstance and is subject to change.

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