Incorporate.ltd

🇬🇧 Corporate Tax in United Kingdom

Headline rate: 25% (19% for small profits up to £50,000)

Private Limited Company (Ltd)

A Ltd company pays Corporation Tax on its worldwide profits at 25% (the main rate for profits over £250,000). Companies with profits up to £50,000 pay the small profits rate of 19%. A marginal relief applies for profits between £50,000 and £250,000. Directors typically extract income through a combination of a small salary (up to the NIC threshold) and dividends, which are taxed at 8.75% (basic rate), 33.75% (higher rate), or 39.35% (additional rate) after a £1,000 annual dividend allowance. Capital allowances, R&D tax credits, and the Annual Investment Allowance (AIA) offer further relief.

Limited Liability Partnership (LLP)

An LLP is tax-transparent: the LLP itself does not pay Corporation Tax. Instead, each member is taxed individually on their share of the profits. Individual members pay Income Tax at rates of 20% (basic), 40% (higher), and 45% (additional), plus Class 2 and Class 4 National Insurance Contributions. Corporate members pay Corporation Tax on their share. There is no dividend tax, but members cannot benefit from the salary-plus-dividend extraction strategy available to Ltd company directors. Losses can be offset against other personal income, subject to anti-avoidance rules.

Public Limited Company (PLC)

A PLC pays Corporation Tax on its profits at the same rates as a Ltd (25% main rate, 19% small profits rate). However, listed PLCs are subject to additional reporting and disclosure requirements. Dividends paid to shareholders are not deductible for Corporation Tax purposes. Shareholders pay dividend tax at their marginal rate. PLCs may benefit from the Substantial Shareholding Exemption (SSE) on disposals of qualifying shareholdings. Transfer pricing rules apply more rigorously to large PLCs with connected-party transactions. Listed PLCs must also comply with SDRT (Stamp Duty Reserve Tax) on share transfers at 0.5%.

Key Facts

  • Double tax treaties: 130
  • Memberships: WTO, G7, G20, Commonwealth, NATO
  • Legal system: Common law
  • Fiscal year: April – March (tax year)

This content is educational and does not constitute legal or tax advice. Always consult a qualified professional for your specific situation. Data last verified March 2026.