What's the Corporation Tax rate for a small company?

So what rate will my company actually pay?

It depends on one thing: how much profit your company made in the year. Profit is your income minus the genuine business costs you're allowed to take off. There are two set rates, and a middle band between them:

• Profit of £50,000 or less: you pay 19%. This is the rate most small companies pay.
• Profit over £250,000: you pay 25%.
• Profit between £50,000 and £250,000: you pay a rate in between the two, which climbs gradually from 19% toward 25% the closer your profit gets to £250,000.

You don't pick the rate or work out the middle band yourself. We read your figures and apply the right one.

What does 19% look like in real money?

Say your company made £30,000 profit for the year. That's under £50,000, so the whole lot is taxed at 19%:

You'd keep £24,300. Simple, because the profit sits comfortably inside the lower band.

What if my profit is over £250,000?

Once your profit goes over £250,000, the 25% rate applies. Say your company made £300,000 profit:

Most small companies never reach this band, but it's the figure that applies once you do.

What about the bit in the middle, between £50,000 and £250,000?

This is where it gets fiddlier, and where most people would reach for a calculator. The good news: you don't have to.

When your profit lands between £50,000 and £250,000, you don't suddenly jump from 19% to 25%. Instead the rate eases up the higher your profit goes. The technical name for the adjustment that smooths it out is marginal relief, but all it really means is your effective rate sits somewhere between 19% and 25%.

Here's a real example. Say your company made £100,000 profit:

You won't find that 22.75% printed on any rate table, because it's worked out for your specific profit. We do that calculation for you and show you the figure to check, so you're never left squinting at a formula.

Are the £50,000 and £250,000 limits always those figures?

Not always. Two things can make those two figures smaller for your company, and a smaller upper limit means the higher rate (or the in-between rate) can start to bite on a smaller profit than you'd expect. The good news: you don't have to work either of these out. We do it from your figures and the dates of your year.

1. A year shorter than 12 months. If your company's accounting year is shorter than a full 12 months, both figures are scaled down to match. This most often happens in a company's very first year, which is usually a part-year. As a rough idea, a 6-month first year would carry limits of about £25,000 and £125,000 instead of £50,000 and £250,000. So a brand-new company can land in the in-between band at a profit it assumed was safely in the 19% band. You don't need to do this sum, we read your year's start and end dates and scale the limits for you.

2. More than one company under the same control. If the same person, or the same group of people, controls more than one company, those two figures get shared out between the companies. Control your company plus one other, and the £50,000 lower figure is split in half to £25,000 and the £250,000 upper figure halves to £125,000. Control three companies, and each gets a third, and so on.

Both of these are exactly the kind of thing that's easy to get wrong by hand, so we don't ask you to. You just tell us how many other companies share the same control (most one-company businesses answer none), and we use your year's dates and that answer to shrink the limits and apply the right rate for you. Companies that are dormant and don't trade are generally left out of the count.

How does SimpleReturns work out my rate?

You don't choose a rate or do any of the maths. We take your year's income and costs, work out your profit, and then apply the correct rate, the flat 19%, the flat 25%, or the in-between effective rate for the middle band. If you control other companies, we adjust the £50,000 and £250,000 limits before we do it. You see every figure, including the final tax, before anything is sent.