Definition
UK corporation tax is the tax on the taxable profits of UK-resident companies and on the UK-branch profits of non-resident companies. From 1 April 2023 the main rate is 25%, applying to profits over £250,000, with a small profits rate of 19% for profits up to £50,000 and marginal relief between the two thresholds. R&D tax relief operates within the corporation tax framework, either reducing taxable profits or, under the merged scheme and RDEC, producing a taxable above-the-line credit.
How HMRC defines it
The corporation tax framework is in the Corporation Tax Acts 2009 and 2010, administered through the Corporation Tax Self Assessment regime in Schedule 18 to Finance Act 1998. HMRC's Company Taxation Manual (CTM) is the main reference. The main and small profits rates were set by Finance Act 2021 with effect from April 2023.
Practical example
A UK trading company has taxable profit of £400,000 for the year ended 31 March 2025. Corporation tax is charged at 25% on the profit over the £250,000 threshold with marginal relief for the lower band, giving a liability of approximately £94,250 before any R&D relief or other adjustments.