# Taxation in the United Kingdom/Corporation tax/Tax rates

The rate of corporation tax is determined by reference to the financial year. A financial year runs from 1 April to the following 31 March. So, Financial Year FY06 started on 1 April 2006 and will end on 31 March 2007. The main rate of corporation tax is 30%. However, lower rates are sometimes applicable.
Tax rates for FY03 to FY05 :
| | GBP (£) |
| Starting rate zero | 0 - 10,000 |
| Marginal relief | 10,001 - 50,000 |
| Small companies' rate 19% | 50,001 - 300,000 |
| Marginal relief | 300,001 - 1,500,000 |
| Main rate 30% | 1,500,001 or more |
Tax rates for FY06 :
| | GBP (£) |
| Small companies' rate 19% | 0 - 300,000 |
| Marginal relief | 300,001 - 1,500,000 |
| Main rate 30% | 1,500,001 or more |
Notes:
* The bands shown on the right hand side are divided by one plus the number of associates (usually the only associates a company has are fellow group companies, but the term is more widely defined)
* The reduced rates do not apply to close investment holding companies (companies controlled by fewer than 5 people (plus associates) or by their directors/managers, whose main activity is the holding of investments). Nor do they apply to companies in liquidation after the first 12 months.
* Authorised unit trusts and open-ended investment companies are taxed at the lower rate of income tax, which, for 2005/6 is 20%.
* Life assurance companies are taxed using the above rate on shareholder profits and the lower rate of income tax, which, for 2005/6 is 20%, on policy holder profits.
* Companies active in the oil and gas extraction industry in the UK or on the UK continental shelf are subject to an additional 10% charge on their profits from those activities.

## Non-corporate distribution rate

For distributions made between 1 April 2004 and 31 March 2006 a non-corporate distribution rate of 19% was levied. This measure ensured that all amounts distributed to non-corporates (eg individuals, trusts and personal representatives of deceased persons) suffered corporation tax of at a rate of at least 19%.
    Preceding page: Accounting periods

## References

* ↑ Section 135 of the Finance Act 2003 for the charge for FY03, Section 27 of the Finance Act 2004 for the charge for FY04, Section 12 of the Finance Act 2005 for the charge for FY05
* ↑ Section 135 of the Finance Act 2003 for the charge for FY03, Section 27 of the Finance Act 2004 for the fraction for FY04, Section 12 of the Finance Act 2005 for the fraction for FY05
* ↑ Section 134 of the Finance Act 2003 for the charge for FY03, Section 26 of the Finance Act 2004 for the charge for FY04, Section 11 of the Finance Act 2005 for the charge for FY05
* ↑ Section 134 of the Finance Act 2003 for the fraction for FY03, Section 26 of the Finance Act 2004 for the fraction for FY04, Section 11 of the Finance Act 2005 for the fraction for FY05
* ↑ Section 30 of the Finance Act 2002 for the charge for FY03, Section 133 of the Finance Act 2003 for the charge for FY04, Section 25 of the Finance Act 2004 for the charge for FY05, Section 10 of the Finance Act 2005 for the charge for FY06
* ↑ Section 134 of the Finance Act 2003 for the charge for FY03, Section 26 of the Finance Act 2004 for the charge for FY04, Section 11 of the Finance Act 2005 for the charge for FY05
* ↑ Section 134 of the Finance Act 2003 for the fraction for FY03, Section 26 of the Finance Act 2004 for the fraction for FY04, Section 11 of the Finance Act 2005 for the fraction for FY05
* ↑ Section 30 of the Finance Act 2002 for the charge for FY03, Section 133 of the Finance Act 2003 for the charge for FY04, Section 25 of the Finance Act 2004 for the charge for FY05, Section 10 of the Finance Act 2005 for the charge for FY06
* ↑ Section 13 and Section 13AA of the Income and Corporation Taxes Act 1988
* ↑ Section 13A of the Income and Corporation Taxes Act 1988.
* ↑ Section 468(1A) of the Income and Corporation Taxes Act 1988
* ↑ Section 88(1) of the Finance Act 1989
* ↑ Section 501A(1) of the Income and Corporation Taxes Act 1988
* ↑ Section 13AB of the Income and Corporation Taxes Act 1988 and Schedule A2 of the Income and Corporation Taxes Act 1988