The corporation tax rates for small and large companies was aligned at 20% from April 2015. This removed the need for the associated companies rule and the marginal rate of corporation tax was also abolished. The rates for the three financial years to 31 March 2021 are as follows:
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Research and Development (R&D)
Small and medium (SME) companies can claim enhanced deductions for expenditure on R&D projects at 230% of qualifying expenditure. Where the deduction is claimed and the company makes a loss, it can claim a cash credit from HMRC of 14.5% of that loss.
Research and Development Expenditure Credit (RDEC) scheme
Large companies can claim an 13% uplift on the following qualifying expenditure:
- Staffing costs
- Expenditure on externally provided workers
- Software and materials
- Contributions to independent research
- Subcontractors of qualifying bodies and individuals/partnerships
RDEC differs from the previous R&D scheme for large companies as it is an 'above the line' tax credit and can be accounted for in the profit/loss statement.
Around 53 enterprise zones have been formed around the country to encourage investment and job formation. Businesses in some of those zones can claim 100% capital allowances on the equipment they use within the zone. The period for which those 100% allowance are available has been extended by three years to 31 March 2020.
See our helpsheet an introduction to capital gains tax.