The run up to the end of the tax year on 5 April 2025 is a good time to check that your business finances are arranged in the best way possible. In the first of a short series of Year End tax planning articles, we look at useful ways to take advantage of available tax reliefs and planning opportunities.
This article offers some practical points to consider on corporation tax planning. As your accountants, we have the insight that can make an impact, and we look forward to being of assistance.
Planning issues for companies
Higher rates of Corporation Tax since 2023, combined with the operation of marginal relief, have made planning for optimal tax efficiency more complex.
Corporation Tax
The rate of Corporation Tax payable depends on the level of taxable profits in the company, plus certain dividends received by the company.
| Taxable profits | Corporation Tax rate |
| £0 to £50,000 | 19% small profits rate |
| £50,001 to £250,000 | 25% less marginal relief |
| Over £250,000 | 25% main rate |
The Corporation Tax rate is applied to the company’s taxable total profits. A company with profits of £400,000 would therefore have a Corporation Tax liability of £100,000 (25% of £400,000).
Companies with profits between £50,000 and £250,000 pay at the main rate reduced by marginal relief. This creates a gradual increase in the Corporation Tax rate, resulting in an effective tax rate of 26.5% for profits between £50,000 and £250,000.
| Action point: maximise deductions |
| The impact of marginal relief means maximising deductions is particularly important for companies where profits fall between these thresholds. We can help you identify relevant claims for deductions for your business. |
Group structure is important as the limits are shared where there are associated companies.
If you’d like to discuss the situation highlighted in this article or talk to us about how we could support you on outsourced accounting services, please get in touch with us on info@teamsas.co.uk or call 0118 911 3777.
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