Richard Curtis offers a reminder that the benefits of the small profits rate and marginal relief should not be overlooked when dealing with smaller companies.
The UK’s corporation tax regime for smaller companies has undergone significant changes over time. For many years, a system of marginal relief and small profits rates existed to support and incentivise smaller businesses. However, from April 2015, the UK moved to a single corporation tax rate for all companies and the small profits rate was abolished.
This lasted until April 2023, when a two-tier system was reintroduced with a small profits rate being reinstated alongside the main rate. The explanation for this change was that it was to ensure that smaller, less profitable businesses were not unduly burdened by corporation tax increases aimed at larger, more profitable entities.
