Budget Notes

BN02 CORPORATION TAX MAIN RATES

Who is likely to be affected?

1. Companies with profits above the upper relevant maximum amount (URMA) (currently £1.5m), companies that are part of a group with profits above the URMA, and companies with profits from oil extraction and oil rights in the UK and the UK Continental Shelf ('ring fence profits').

General description of the measure

2. Legislation will be introduced in Finance Bill 2008 to set the main rate of corporation tax (CT) at 28 per cent on and after 1 April 2009.

3. The main rate of CT for companies' ring fence profits will also remain at 30 per cent on and after 1 April 2009.

Operative date

4. These rates will have effect on and after 1 April 2009.

Current law and proposed revisions

5. The various CT rates are to be found in the Income and Corporation Tax Act 1988 and are legislated annually in the Finance Act (FA). The current provisions for the charge of CT can be found at sections 2-3 of FA 2007.

6. The current rules at section 2 of FA 2007 provide that the main rate of CT is chargeable at 28 per cent on profits (above £1.5 million) of companies other than ring fence profits, and 30 per cent on ring fence profits (above £1.5 million) of companies.

Further advice

7. If you have any questions about this change, please contact your local HMRC office. Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk