Corporation Tax

Companies with profits between £50,000 and £250,000 will pay tax at the main rate, reduced by a marginal relief. This provides a gradual increase in the effective Corporation Tax rate. The main rate is 25% and the small profits rate (companies with profits under £50,000) is 19%.

Calculation of the taxable income broadly follows the rules for individuals except that:

1. From 6th April 2020 non-resident companies of which the income is derived mainly from UK property have been subject to UK Corporation Tax in the same way as UK companies.
2. Transactions occurring outside the UK and relating to non-UK assets by a non-resident company are outside the scope of UK tax. UK resident companies are subject to Corporation Tax on income and gains wherever in the world they occur. The Tax Treaties may go some way to reducing the tax due if a transaction has been taxed overseas.
3. Gains arising on disposals by companies are subject to Corporation Tax.
4. The S24 loan interest relief restriction does not apply to companies.

Top

Annual Tax on Enveloped Dwellings (ATED)

Annual Tax on Enveloped Dwellings (ATED) is an annual tax payable by non-natural persons (such as limited companies) that own UK residential property valued at more than £500,000. This tax is subject to numerous exemptions and reliefs.

Property value	2024-25	2025-26
£0 – £500K	N/A	N/A
£500K – £1m	£4,400	£4,450
£1m – £2m	£9,000	£9,150
£2m – £5m	£30,550	£31,050
£5m – £10m	£71,500	£72,700
£10m – £20m	£143,550	£145,950
Over £20m	£287,500	£292,350

• For 2024-25 the bands are the value ranges as at 1st April 2022.
  For example if the house was worth £1.9m in April 2017, the 2022-23 tax would have been £7,700; if the same house had gone up in value since 2017 and was worth £2.1m as at 1st April 2022, then the tax for 2024-25 would be £31,050 (payable by 30th April 2025). That is because relevant properties are valued once every five years.
• There are numerous reliefs, including where the property has been let commercially. To claim a relief the owner MUST claim this relief on an ATED Relief Declaration Return, which must be submitted annually.

Top

Stamp Duty Land Tax (SDLT)

Stamp Duty Land Tax (SDLT) is a tax payable on purchases of property or land over a certain price. Special rates apply to purchases in Scotland and Wales. The following apply to England and Northern Ireland only.

Residential property

Rates applicable from 31st October 2024

Purchase price or lease premium cost or transfer value	SDLT rate for UK resident company	SDLT rate for non-resident company
£0 to £40,000 only	0%	0%
£0 to £250,000 (where cost higher than £40,000)	5%	7%
Next £675,000 (portion from £250,001 to £925,000)	10%	12%
Next £575,000 (portion from £925,001 to £1.5 million)	15%	17%
The remaining amount (portion above £1.5 million)	17%	19%

• With effect from 31st October 2024, the SDLT payable on the purchase by a company (or other non-natural person) of a residential property where the price is more than £500,000 is subject to the higher rate of SDLT, unless relief is available. 
• If the price is under £500,000 the table above applies.
• Relief from the 17% / 19% higher rate charge may be available if the purchased property is:
  • used in a property rental business, or
  • bought by a property developer or trader, or
  • used in a trade involving making the property available to the public, or
  • bought by a financial institution in the course of lending, or
  • occupied by employees of the purchaser, or
  • a farmhouse, or
  • bought by a qualifying housing co-operative.
  • You must meet the conditions that apply for each relief.
• If the company purchaser meets the conditions for the relief and the property costs more than £500,000, the table above applies and NOT the higher rate charge.
• The rates will be subject to an increase from 1st April 2025.

Switch to: SDLT RATES FOR INDIVIDUALS

Top

Notes

1. When a director/shareholder draws money from a UK company, there are only four types of withdrawal permitted:
   1. Repayment of a loan previously made to the company
   2. Reimbursement of expenses incurred on the business of the company
   3. Dividend
   4. Salary or bonus
      
      Dividend, salary, and bonuses are taxable in the hands of the recipient at the prevailing rates. While the salary or bonus may reduce the profit subject to Corporation Tax, a dividend does not. Salary and bonuses may be subject to National Insurance Contributions. Payment of salary or bonus will require the creation of a PAYE scheme.
      
2. A company does not enjoy the Personal Allowance for individuals, nor does it enjoy the annual exempt amount for Capital Gains.

Need help with tax matters? Contact us now

---