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Corporation tax

10. CORPORATION TAX



Rates from 1 April 2001 have been held at their current levels which means that:



  • The small companies&#39 rate of corporation tax will continue to be at 20%, and will apply where a company has profits of between £50,000 and £300,000.


  • The full rate of corporation tax will continue to be at 30% and will apply to profits of a company of more than £1,500,000.


  • In between the £300,000 and £1,500,000 figures, marginal rate relief applies. This operates to increase the overall rate of tax to somewhere between the small companies&#39 rate of 20% and the main rate of 30%. Profits in excess of £300,000 will effectively bear tax at the marginal rate of 32.5%.


  • Where a company&#39s profit do not exceed £10,000 the 10% corporation tax rate will apply. Any profit between £10,000 and £50,000 will be assessable at the marginal rate of 22.5%.

Changes have been proposed affecting withholding tax on intra-UK corporate interest and royalty payments, a loophole has been closed in the controlled foreign company rules and minor amendments have been made to the rules for chargeable gains of groups of companies.

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