BN03 - Corporation Tax Main Rates

Who is likely to be affected?

  1. Companies with profits above what is deemed the upper relevant maximum amount (URMA) (currently £1,500,000), companies that are part of a group with profits above the URMA, and companies with profits from oil extraction and oil rights in the UK and the UK Continental Shelf (‘ring fence profits’).

General description of the measure

  1. The main rate of corporation tax will become 28% from 1 April 2008.
  2. The main rate of corporation tax for companies’ ring fence profits will be 30% from 1 April 2008.

Operative date

  1. The legislation will set the main rate of corporation tax and the main rate of corporation tax for ring fence profits from the 1 April 2008.

Current law and proposed revisions

  1. The various corporation tax rates are to be found in the Income and Corporation Taxes Act 1988 and are maintained yearly through the Finance Act. The current provisions for the charge of corporation tax can be found at sections 24 and 25 of the Finance Act 2006.
  2. The current rules at section 24 of the Finance Act 2006 provide that the main rate of corporation tax is chargeable at 30% where a company’s profits are above £1,500,000.
  3. This amendment to the current rules will reduce the main rate of corporation tax to 28% from the financial year 2008-09.
  4. New rules will be introduced to set the main rate of corporation tax on ring fence profits at 30% from the financial year 2008-09.

Further advice

  1. If you have any questions about this measure, please contact your local HMRC office.