Corporation Tax in 2025: What UK Business Owners Need to Know
- Edwin Samu
- 6 days ago
- 2 min read
Corporation Tax isn’t always at the top of a business owner’s to-do list, but it remains a crucial part of financial planning. As we move through the 2025/26 tax year, now is a good time to review the current Corporation Tax landscape to ensure your business remains compliant and tax-efficient.
Current Corporation Tax Rates
There have been no major changes to Corporation Tax rates since April 2023, but it’s worth recapping what the structure looks like today:
Companies with profits up to £50,000 pay the Small Profits Rate of 19%.
Companies with profits over £250,000 pay the Main Rate of 25%.
Businesses earning between £50,001 and £250,000 fall into a marginal relief band, where the tax rate gradually increases from 19% to 25%.
This tiered system is designed to ease smaller businesses into higher rates as their profits grow, rather than applying a steep increase all at once.
The Associated Companies Rule
If you own or control more than one company, HMRC may consider them “associated companies.” This matters because the profit thresholds used to determine your tax rate are then split between those companies.
For example, if you have two associated companies, the £50,000 small profits threshold becomes £25,000 per company. This can bring smaller businesses into higher tax brackets sooner than expected, so it’s important to be aware of your structure and plan accordingly.
Year-End and Apportioning Profits
Not every business has a year-end that lines up with the UK tax year. If your company’s accounting period spans different Corporation Tax years, your profits may need to be apportioned accordingly.
This means you’ll need to divide your profits between the applicable tax periods and apply the relevant tax rates to each portion. For example, a company with a December year-end will need to apply two different tax rates if there’s a change mid-year or if rates are being phased.
This process can be complex and is often an area where businesses benefit from professional support.
What to Expect Going Forward
At the time of writing, Corporation Tax rates remain unchanged for 2025/26. However, broader conversations around tax reform are ongoing, particularly with a general election on the horizon and global discussions around digital services taxes.
While no immediate changes are confirmed, businesses should stay alert to potential shifts that could impact planning and reporting in future years.
How Edmil Accountants Can Help
Understanding Corporation Tax is about more than just filing returns. At Edmil Accountants, we help our clients proactively manage their tax position, plan ahead, and identify opportunities to operate more efficiently.
Whether you're a small company wondering if marginal relief applies to you, or a growing business navigating multiple entities, we offer clear, tailored guidance.
If you’d like to review your Corporation Tax strategy for 2025 or ensure you’re taking full advantage of available reliefs, we’re here to help.
Get in touch today to speak with our team.
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