UK Corporate Tax Update 2024: Key Changes Explained

The UK's corporation tax system operates on a tiered structure: companies with profits under £50,000 pay the small profits rate of 19%, profits over £250,000 pay the main rate of 25%, and profits in between are taxed at 25% with marginal relief reducing the effective rate.

For groups with associated companies, the profit thresholds are divided by the number of associated companies — a detail that catches many multi-entity structures off guard when a new subsidiary is added partway through a tax year.

Full expensing for qualifying plant and machinery investment remains available, allowing companies to deduct 100% of qualifying capital expenditure in the year it's incurred rather than depreciating it over several years.

R&D tax relief has moved toward a merged scheme for most companies, replacing the separate SME and RDEC schemes that existed previously — the calculation methodology and qualifying cost categories changed as part of this merger.

Businesses that haven't reviewed their corporation tax position against these specific changes since the update took effect should treat this as a priority item, particularly if they have associated companies or significant capital expenditure planned.