Corporation Tax is a significant consideration for any limited company in the UK, and even small adjustments to the rules can have a big impact on your bottom line. As we move through 2025, several important updates have come into effect that business owners need to be aware of – both to stay compliant and to take advantage of any new opportunities.
At David Proctor Accountancy, we help businesses stay ahead of legislative changes so they can plan effectively. Here’s what you need to know about Corporation Tax in 2025.
1. Main Rate Thresholds Remain – But Planning Still Matters
The main Corporation Tax rate continues to apply at 25% for companies with profits over £250,000, while the small profits rate of 19% remains for profits up to £50,000. Profits between these thresholds are taxed at a tapered rate. Strategic tax planning is key for companies hovering near the boundaries, as profit allocation can directly affect your tax bill.
2. Marginal Relief – Still Overlooked
Marginal Relief continues to soften the jump from 19% to 25% for businesses in the middle bracket, but many companies fail to calculate it correctly. Errors here can lead to overpayments or HMRC queries, so it’s essential to get professional support when preparing your return.
3. Capital Allowances and Full Expensing
The government has extended the full expensing scheme, allowing companies to deduct 100% of the cost of qualifying plant and machinery in the year of purchase. This presents a valuable opportunity for businesses considering investment, but timing purchases strategically can maximise the benefit.
4. R&D Tax Relief Adjustments
Changes to R&D tax relief mean that some businesses, particularly SMEs, may see different rates of relief in 2025. This area remains complex, and ensuring claims are accurate and well-documented is critical to avoiding HMRC challenges.
5. HMRC’s Increased Compliance Activity
With HMRC increasing its focus on tax compliance, particularly in areas such as transfer pricing and profit allocation, accurate and well-organised records are more important than ever.
Staying Ahead of the Changes
Understanding Corporation Tax changes is only part of the picture – the real benefit comes from applying that knowledge to your business strategy. Whether it’s structuring investments, managing profit distribution, or ensuring accurate calculations, the right advice can make a significant difference.
At David Proctor Accountancy, we provide proactive tax planning to help you adapt to legislative changes and keep your liabilities as low as legally possible. We ensure you stay compliant, while also making the most of every available relief and allowance.
Want to know how the 2025 Corporation Tax changes affect your business? Get in touch with David Proctor Accountancy today for expert guidance tailored to your circumstances.
