10. CORPORATION TAX
Rates from 1 April 2001 have been held at their current levels which means that:
- The small companies' 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' 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's 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.