Quick answer: UK corporation tax is the tax charged on the taxable profits of UK-resident companies and UK branches of overseas companies. From 1 April 2023 the main rate is 25% on profits over £250,000, with a 19% small profits rate up to £50,000 and marginal relief in between. R&D tax relief operates within this corporation tax framework.
What is UK corporation tax?
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 does HMRC define UK corporation tax?
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.
What does UK corporation tax look like in practice?
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.
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Frequently asked questions
From 1 April 2023 the main rate of UK corporation tax is 25%, applying to profits over £250,000. A small profits rate of 19% applies to profits up to £50,000, with marginal relief for profits in between.
The framework is set out 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 is the main reference, and the current rates were set by Finance Act 2021 with effect from April 2023.
R&D tax relief operates within the corporation tax framework: it either reduces taxable profits or, under the merged scheme and RDEC, produces a taxable above-the-line credit. The eligibility checker gives an indicative estimate of how R&D relief could affect a company's position.
For the year ended 31 March 2025, a UK trading company with taxable profit of £400,000 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.