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.

Notes:
 * 1) 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)
 * 2) 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.
 * 3) Authorised unit trusts and open-ended investment companies are taxed at the lower rate of income tax, which, for 2005/6 is 20%.
 * 4) 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.
 * 5) 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%.


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