Topic overview

Business tax rates and thresholds

Business tax rates and thresholds

We've scoured the web to get you the most up-to-date advice which includes the most useful tools on offer from the officials themselves. The list below gives a summary of the key tax rates and allowances for the current and previous tax years and forthcoming changes to tax rates and tax thresholds where they have been previously announced. Use the links for further details. 

Corporation tax rates

The main rate of corporation tax is 19%, unchanged from previous years.

Find corporation tax rates for earlier years by visiting the HMRC pages.

The small profits rate and main rate of corporation tax were aligned on 1 April 2015 into the single main rate above. For years prior to April 2015, you can use the HMRC marginal relief calculator for company profits between the small profits rate threshold and the main corporation tax threshold.

Capital allowances

You may be able to deduct all or a percentage of your capital expenditure from your trading profits.

For plant and machinery:

  • main writing down allowance is 18%, unchanged from previous years;
  • special rate pool is 6%;
  • structures and building allowance is 3% from 1 April 2020 for corporation tax and from 6 April 2020 for income tax;
  • annual investment allowance is 100% on £1 million (until 31 March 2023).

For motor cars:

  • 100% on electric cars and those with low emissions, less than 50g/km;
  • 18% for those with emissions between 50 and 110g/km;
  • 6% for those with emissions over 110g/km.

Special rules apply for some types of assets. Guidance can be found on the GOV.UK pages.

Chargeable gains and indexation allowances

For companies, gains or losses on disposals of assets are dealt with through corporation tax. 

The taxable gain takes inflation into account. On the HMRC pages you can find details of this indexation allowance to reduce chargeable gains.

For sole traders and partnerships, disposals of assets are dealt with through capital gains tax, usually as part of their annual self assessment return.

Business rates and stamp duty

Find current and historic business rate multipliers by visiting the Valuation Office Agency website.

Stamp duty on non-residential property purchases and lease premiums has remained the same since 17 March 2016:

  • property value up to £150,000 at 0%;
  • property value between £150,001 and £250,000 at 2%;
  • property value over £250,000 at 5%.

There is an additional 2% surcharge for non-UK residents purchasing residential property in England and Northern Ireland from 1 April 2021.

Find further details of stamp duty land tax (SDLT) rates and thresholds for both commercial and residential property and various reliefs by visiting the HMRC website.

VAT thresholds and tax rates

VAT rates and thresholds below have remained unchanged since 2017/18.  You can find details of historic VAT registration and deregistration thresholds by visiting the HMRC website.

The registration and deregistration thresholds will remain at their current level for a further two years from 1 April 2022. 

  • Annual registration threshold: VAT taxable turnover £85,000.
  • Annual de-registration threshold: VAT taxable turnover £83,000.
  • Standard rate of VAT is 20%.
  • Reduced-rate supplies are taxed at 5% and zero-rated goods at 0%.

Smaller businesses can simplify their VAT with special accounting schemes. The VAT taxable turnover limits are:

  • Annual accounting scheme: registration is allowed provided your estimated VAT taxable turnover for the next year is no more than £1.35 million; businesses using the scheme can do so until their estimated turnover exceeds £1.6 million.
  • Cash accounting scheme: registration limit £1.35 million; deregistration £1.6 million.
  • Flat rate accounting scheme: registration limit £150,000; deregistration £230,000.
  • Different retail schemes and margin schemes for traders in second-hand goods are also available, depending on your turnover. Take advice on what best suits your circumstances.

National Insurance Contributions thresholds and rates 

Class 1 employee and employer weekly thresholds:

  • Lower earnings limit: £123;
  • Primary threshold: £190;
  • Secondary thresholds: £175;
  • Freeport upper secondary threshold: £481;
  • Upper earnings limit and threshold: £967.

Class 1 rates:

  • Employee and employer rate below Primary and Secondary thresholds is 0%;
  • Employee rate between Primary threshold and Upper limit is 13.5%;
  • Employee rate above the Upper limit is 3.25%
  • Employer rate on earnings above Secondary threshold is 15.05%.

The main self-employed rates are: 

  • Class 2 flat rate at £3.15 per week;
  • Class 4 at 10.25% on profits between £9,880 and £50,270;
  • Class 4 at 3.25% on profits above £50,270.

Find further details for National Insurance contributions (NICs) rates and thresholds for employees, employers and the self-employed by visiting the HMRC pages.

PAYE rates and thresholds

Taxable income for employees is calculated after taking into account their tax-free personal allowance.

  • Income tax basic rate is 20% on taxable income up to £37,700.
  • Higher rate income tax is 40% on taxable income between the basic rate band £150,000 (unchanged).
  • Additional rate tax is 45% on annual earnings above £150,000.

Visit the HMRC pages to find further details for PAYE rates and thresholds for employers.

Use the HMRC tax checker for employees for a quick assessment of whether you paid the correct tax for a previous year. This calculator is not suitable for the self-employed.

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