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CLAUSE 54: CORPORATION TAX – CHARGE AND MAIN RATE FOR FINANCIAL YEAR 2002

SUMMARY

This clause charges corporation tax for the financial year beginning 1 April 2002 and sets the main rate at 30 per cent (the same as for the previous year). 

BACKGROUND NOTE

1.   The main rate of corporation tax is paid by companies with profits of more than £1,500,000 (the upper profits limit).

2.   Where two or more companies are associated with one another, the profits limit is reduced.  This is done by dividing the profits limit by the number of companies that are associated together. So, if there are three associated companies, the upper profits limit becomes £500,000 (£1,500,000 divided by three) and any of the associated companies with profits above this level is liable at the main rate.

3.   Less than 10 per cent of companies paying corporation tax do so at the main rate, and they contribute around 85% of the total corporation tax yield.