UK tax on UK-resident companies and companies with permanent establishments in the UK
Throughout this article, the term "pound" and the £ symbol refer to the Pound sterling.
UK Corporation Tax Receipts from 1999–2016, both in absolute terms and as % of GDP: includes Bank Levy and Bank Surcharge.[1][2]
Taxation in the United Kingdom
UK Government Departments
HM Treasury
HM Revenue and Customs
UK Government
VAT
Income tax
PAYE
National Insurance
Health and Social Care Levy (proposal abolished)
Corporation tax
Capital gains tax
Motoring taxes
Inheritance tax
Stamp Duty
Stamp Duty Reserve Tax
Stamp Duty Land Tax
Annual Tax on Enveloped Dwellings
Insurance Premium Tax
Air Passenger Duty
Petroleum Revenue Tax
Aggregates Levy
Various alcohol- and gambling-related duties
Bingo Duty
Climate Change Levy
Landfill tax
Machine Games Duty
Tobacco Duty
Vehicle Excise Duty
Scottish Government
Revenue Scotland
Scottish income tax
Land and Buildings Transaction Tax
Scottish Landfill Tax
Air Departure Tax
Welsh Government
Taxation in Wales
Welsh Revenue Authority
Welsh Rates of Income Tax
Land Transaction Tax
Landfill Disposals Tax
Local Government
Council Tax
Domestic rates in Northern Ireland
Business rates in England
Business rates in Wales
Business rates in Scotland
Business rates in Northern Ireland
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Corporation tax in the United Kingdom is a corporate tax levied in on the profits made by UK-resident companies and on the profits of entities registered overseas with permanent establishments in the UK.
Until 1 April 1965, companies were taxed at the same income tax rates as individual taxpayers, with an additional profits tax levied on companies. Finance Act 1965[3] replaced this structure for companies and associations with a single corporate tax, which took its basic structure and rules from the income tax system. Since 1997, the UK's Tax Law Rewrite Project[4] has been modernising the UK's tax legislation, starting with income tax, while the legislation imposing corporation tax has itself been amended, the rules governing income tax and corporation tax have thus diverged. Corporation tax was governed by the Income and Corporation Taxes Act 1988 (as amended) prior to the rewrite project.[5][6]
Originally introduced as a classical tax system, in which companies were subject to tax on their profits and companies' shareholders were also liable to income tax on the dividends that they received, the first major amendment to corporation tax saw it move to a dividend imputation system in 1973, under which an individual receiving a dividend became entitled to an income tax credit representing the corporation tax already paid by the company paying the dividend. The classical system was reintroduced in 1999, with the abolition of advance corporation tax and of repayable dividend tax credits. Another change saw the single main rate of tax split into three. Tax competition between jurisdictions reduced the main corporate tax rate from 28% in 2008–2010 to a flat rate of 19% as of April 2021.[7][8]
The UK government faced problems with its corporate tax structure, including European Court of Justice judgements that aspects of it are incompatible with EU treaties.[9] Tax avoidance schemes marketed by the financial sector have also proven an irritant, and been countered by complicated anti-avoidance legislation.
The complexity of the corporation tax system is a recognised issue. The Labour government, supported by the Opposition parties, carried through wide-scale reform from the Tax Law Rewrite project, resulting in the Corporation Tax Act 2010. The tax has slowly been integrating generally accepted accounting practice, with the corporation tax system in various specific areas based directly on the accounting treatment.
Total net corporation tax receipts were a record high of £56 billion in 2016–17.[10]
^"HMRC Corporation Tax Statistics 2017" (PDF). Archived from the original (PDF) on 6 October 2017. Retrieved 6 October 2017.
^"Gross Domestic Product at market prices: Current price: Seasonally adjusted £m".
^"Finance Act 1965 (c. 25), from UK Statute Law Database". UK Statutory Publications Office, Ministry of Justice. Retrieved 9 May 2007.
^Tax Law Rewrite Archived 18 April 2006 at the Wayback Machine, Her Majesty's Revenue and Customs (HMRC). Retrieved 17 April 2007
^[1]Income and Corporation Taxes Act 1988 (c. 1), Office of Public Sector Information, responsible for the operation of Her Majesty's Stationery Office (HMSO), ISBN 0-10-540188-9
^Most income tax rules have been rewritten in the Income Tax (Earnings and Pensions) Act 2003, Income Tax (Trading and Other Income) Act 2005, and Income Tax Act 2007.
^Cite error: The named reference Rates was invoked but never defined (see the help page).
^"Corporation Tax rates and reliefs – GOV.UK". gov.uk. Retrieved 13 October 2015.
^Cite error: The named reference Hoechst was invoked but never defined (see the help page).
^Jackson, Gavin; Houlder, Vanessa (26 April 2017). "Riddle of UK's rising corporation tax receipts". Financial Times. Archived from the original on 10 December 2022.
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