What is Corporation Tax?
Corporation tax is a form of direct taxation (that is a tax paid directly by the party from whom it is due to the government) that is levied on corporate profits. Not all companies necessarily pay corporation tax. Rather, the tax is due on profits made by limited companies and some associations. These include members’ clubs; trade and housing associations; and any other groups of individuals that act as if they are a company rather than a partnership. Crucially, it is not paid by the self-employed. History Corporation tax was not established until 1965; prior to this, companies paid tax in roughly the same way as individuals, although they were also subject to an extra ‘tax on profits’. Today, however, corporation tax is defined and governed by the Income and Corporation Taxes Act (1988), which sets out the way in which the tax is levied. The Act can be viewed in full, with supporting notes, on the HMRC website Corporation tax is currently levied at two separate rates. The standard rat
