Rates of tax

The main rate of Corporation Tax (for companies with profits over £1.5m) has been 28% since 1 April 2008. It will be cut for the Financial Year 2011 (commencing 1 April 2011) to 27%, then to 26% for FY 2012, 25% for FY 2013 and 24% for FY 2014. Mr Osborne affirmed that this will give the UK its lowest ever company tax rate, and one of the lowest in the world.

The small profits rate (for companies with profits up to £300,000) was scheduled to rise from 21% to 22% from 1 April 2011. Instead, it will fall to 20%, where it last stood for the year to 31 March 2008.

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Tax Trap

A small company pays lower rates than a sole trader – should you incorporate?