Accredited official statistics

Background and guidance to interpreting Corporation Tax statistics

Updated 25 May 2021

1. Guidance for this publication

This is a National Statistics publication produced by HM Revenue and Customs. For more information on National Statistics and governance of statistics produced by public bodies, please visit the UK Statistics Authority website.

The tables in this publication provide breakdowns of Corporation Tax (CT) receipts and CT liabilities by number of companies, income, allowances, deductions, broad industry sector and financial year. All statistics relate to the UK. Sub-national geographic breakdowns are available as Official Statistics in a separate publication.

1.1 New and updated statistics in this release and planned improvements

This release includes the CT, Bank Levy and Bank Surcharge receipts figures for the financial year ending 31 March 2020, and the first published CT liability estimates for company accounting periods ending in 1 Apr 2018 - 31 March 2019. Liabilities are gross of company tax credits. These tables are released and updated annually. For CT liability estimates, figures relating to financial years from 2013-14 to 2018-19 have been revised using the latest available data, but no updates have been made to earlier years’ data.

Since CT returns are submitted up to twelve months after the end of an accounting period, there is some delay before the estimates for a relevant year become available.

The next scheduled release is in autumn 2021, which will show CT, Bank Levy and Bank Surcharge receipts figures for 2020-21 and CT liabilities for 2019-20.

The data used to produce these statistics, both for receipts and liabilities, comes from the HMRC administrative system for company taxation, COTAX.

Tables 11.4, 11.5, 11.7 and 11.10 include breakdowns by industrial sectors, e.g. ‘Agriculture, Forestry and Fishing’ and the classification is based on the UK Standard Industrial Classification (SIC) 2007. Companies do not report their SIC 2007 sector to HMRC as part of their CT return or registration so they have been assigned to a sector based on data from external sources; this is predominantly matching records to the ONS’s Inter-Departmental Business Register (IDBR) survey, but if it is not possible to match to this, then it is based on information provided by companies to Companies House. There were some minor changes to methodology for the 2020 publication to improve the reliability of the SIC sector 2007 analysis and the efficiency of the publication process, but this has increased the number of companies where the sector is unknown. From this point, the amount of manual assignment of SIC codes to companies who did not match to either of the above data sources, has also been reduced. Some categories have been amalgamated in order to protect taxpayer confidentiality.

More information about the data sources and methodology can be found in section 3. Key features of CT, Bank Levy and Bank Surcharge are described in section 2. A glossary of terms related to CT is provided in section 5.

This publication only includes figures for previous years. Forecasts of future CT receipts are produced and published by the Office for Budget Responsibility, and can be found on their website.

1.2 Who might be interested?

These tables are likely to be of interest to policy makers in government, academics, research bodies and journalists. They may also be useful to individuals or organisations interested in the number of taxpayers and tax liabilities in total, and the distributions of numbers and amounts, for example by industrial sector or by size of liability.

1.3 What is Corporation Tax

CT is a direct tax charged on the profits made by companies, public corporations and unincorporated associations such as industrial and provident societies, clubs and trade associations. It makes up approximately 9% of the total receipts collected by HMRC.

CT is charged on the profits made in each accounting period, i.e. the period over which the company draws up its accounts. The rates of taxation are set for the financial year from 1 April to 31 March. Where an accounting period straddles 31 March, and so potentially two different tax rates, the company profits are apportioned between the two financial years according to the amount of time that the accounting period covers in each financial year.

Taxable profits for CT include:

• Profits from taxable income such as trading profits or investment profits (except dividend income which is taxed differently).
• Capital gains – known as ‘chargeable gains’ for CT purposes.

Taxable profits for CT purposes often differ from the pre-tax profits in the company accounts. This is partly because the CT regime has a system of capital allowances, which apply instead of depreciation charges for items such as plant and machinery. There are also other allowances, deductions and reliefs that can be applied when calculating the company’s taxable profits. Particularly significant is group relief; companies belonging to a group can surrender their trading losses to offset against the profits of another group member.

A more detailed explanation of the key features of CT is provided in section 2.

1.4 User engagement

We are committed to providing impartial, high quality statistics that meet our users’ needs. We encourage our users to engage with us so that we can improve our official statistics and identify gaps in the statistics that we produce. For more information, please see the Continuous User Engagement Strategy for HMRC statistics.

If you would like to comment on or enquire about these statistics, please use the statistical contacts named at the end of this section.

All HMRC statistics are accessible from the Statistics at HMRC web page.

1.5 UKSA Assessment

These statistics have been assessed for compliance with the Code of Practice for Official Statistics by the UK Statistics Authority (UKSA). The assessment report is available on the UK Statistics Authority website.

UKSA is an independent body directly accountable to Parliament with the overall objective to promote and safeguard the production and publication of official statistics. It is also required to promote and safeguard the quality and comprehensiveness of official statistics and good practice in relation to official statistics.

1.6 Publication and revision strategy

Table 11.1A on CT receipts and tables 11.1B to 11.10 on CT liabilities are published annually to coincide with the availability of final receipts figures for the previous financial year.

For the tables covering liabilities (tables 11.1B to 11.10), the figures for the five years preceding the latest published year are revised using the latest available data, but earlier years will not be updated.

In accordance with the Code of Practice for official statistics, the exact date of publication will be given not less than one calendar month before publication on both the HMRC National Statistics website and UK Statistics Hub. Any delays to the publication date will be announced on the HMRC National Statistics website.

1.7 Contact points

Damian Pritchard - Receipts ct.statistics@hmrc.gov.uk

Stephen Hughes - Liabilities ct.statistics@hmrc.gov.uk

2. Key features of Corporation Tax

This section explains some key features of CT that are useful in understanding the statistical tables.

2.1 Profits and deductions

For CT purposes, a company’s profits comprise its income and capital gains. Income, whether from trading or investments, is calculated in the same way as for income tax purposes including capital allowances where appropriate. Gains are calculated in the same way as for capital gains tax except that companies have no exempt amount and company gains are not affected by the reforms made in 1998 to capital gains tax.

Capital allowances provide relief, for CT purposes, for the consumption or depreciation of capital assets incurred for the purposes of carrying on a trade. Different types of assets qualify for different rates of allowances.

Capital allowances may be claimed in the year in which they accrue and any unused capital allowances may be carried forward to set against profits in later years. They may also be carried back in the same way as trading losses. Tax credits were introduced in the 1999 Budget, and extended later, to provide enhanced relief for research and development and some other types of expenditure. For some types of expenditure, non-taxpayers can receive a payable tax credit.

A company that makes a trading loss may carry that loss back for 1 year (3 years from 1991 to July 1997) to set against the profits of an earlier accounting period. An unrelieved trading loss can also be carried forward without time limit to set against income from the same trade in a future accounting period.

Deductions are allowed from a company’s total profits for any charges (interest and other payments) it pays and, in the case of an investment company, its management expenses. Since April 1996, “loan relationship” rules have been in force for the treatment of interest and similar payments. A deduction against the tax liability is allowed for income tax deducted at source from interest received (to the extent that it is not used to cover income tax the company itself deducts on interest payments it makes). Double taxation relief for foreign tax is allowed as a deduction against the tax charged on profits.

2.2 Company groups

Certain special rules and reliefs apply to companies that operate as a group. A group typically consists of a parent company and a number of subsidiary companies. For two companies to be considered members of the same group for tax purposes, one company has to have at least 75% ownership of the other, or they must both be owned (at least 75%) by a third company. A company that makes a trading loss can surrender that loss as group relief to set against the profits of an equivalent accounting period of another group member. Assets can be transferred between group members without giving rise to a chargeable gain at the time of transfer.

2.3 Inter-company dividends

A company is not taxable on a dividend received from another company resident in the United Kingdom. Such dividend income, if received with the tax credit, is called “franked investment income”. When the company itself pays a dividend, it makes a “franked payment”.

2.4 Tax rates

There was a lower rate of CT for companies with small profits, known as the small profits rate (SPR), formerly the small companies’ rate (SCR). This rate applies when the profits are below a lower limit. Between that limit and an upper limit, the company is taxed at the main rate, but most companies can claim marginal relief to give a smooth progression in the average tax rate from the lower rate to the main rate. Above the upper limit, the main rate applies.The profit limits are restricted for companies associated with one or more other companies according to the number of associated companies to prevent abuse by a company fragmenting into smaller ones.

From 1 April 2015, there is a unified rate of CT rather than separate main and small profits rates.

Different tax rates apply to companies with income and gains from oil and gas and gas extraction or oil rights, known as ‘ring-fence’ companies. These companies are also subject to a supplementary tax charge on their ring-fenced profits.

A special tax rate applies to unit trusts and open-ended investment companies.

2.5 Payment and assessment arrangements

Companies are required to assess their own CT liabilities on broadly the same principles that underlie income tax self-assessment. However, unlike income tax, the deadline for paying CT is before the deadline for filing the company tax return. The company tax return has to be filed within 12 months after the end of the accounting period.

Companies with taxable profits of more than £1.5 million annually are normally required to pay by Quarterly Instalment Payments (QIPs), where the first instalment becomes due in month 7 of the accounting period. Smaller companies in a group where the total taxable profits across the group are over £1.5 million must also pay under the QIPs system. Groups can set up Group Payment Arrangements whereby one nominated company makes instalment payments on behalf of the group. Smaller companies outside the QIPs regime have to pay CT within 9 months and a day of their accounting period end date.

From the 1st April 2019, a new payment regime has been introduced for ‘very large’ companies which requires their CT payment to be paid four months earlier than previously. A very large company is one whose profits for the accounting period in question are at an annual rate of more than £20 million. More information about this new regime can be found on the information for very large companies section of the GOV.UK website.

From 1 April 2011, companies have to submit their tax returns to HMRC online for accounting periods ending after 31 March 2010. Tax computations and (with a few exceptions) company accounts must be submitted in Inline eXtensible Business Reporting Language (iXBRL) format. CT must also be paid electronically.

2.6 Historical Background

Table 1. A summary of the history of the UK Corporation Tax regime.

Date	Corporation Tax changes
1965	CT introduced, with a uniform rate on all profits. An additional charge to income tax was made when profits were distributed.
1973	Small Companies’ Rate (SCR) introduced, with Marginal Relief to smooth the progression between the SCR and the Main Rate. Advance Corporation Tax (ACT) and tax credits (the “partial imputation system”) introduced.
1980s	Substantial reductions in the Main Rate (from 52% to 35%) and the SCR (from 40% to 25%). Reforms to the capital allowances regime.
1990s	Continued reductions in the Main Rate (from 35% to 30%) and the SCR (from 25% to 20%).
October 1993	CT Pay and File system introduced.
2 July 1997	Tax credits on dividends abolished.
1999	ACT abolished. CT Self-Assessment introduced. Quarterly instalment payments (QIPs) introduced for large companies.
1 April 2000	Starting Rate of 10% introduced.
1 April 2002	Starting Rate cut to zero. SCR reduced from 20% to 19%.
1 April 2004	Non-Corporate Distributions Rate (NCDR) introduced on profits distributed to “persons who are not companies”.
1 April 2006	Starting Rate and NCDR replaced by a single rate set at the SCR.
1 April 2007	SCR raised from 19% to 20%.
1 April 2008	Main Rate reduced from 30% to 28%. SCR raised from 20% to 21%
1 April 2011	Main Rate reduced from 28% to 26%. Small Profits Rate (SPR), formerly known as SCR, reduced from 21% to 20%. Introduction of compulsory online filing for Company Tax returns
1 April 2012	Main Rate reduced from 26% to 24%
1 April 2013	Main Rate reduced from 24% to 23%
1 April 2014	Main Rate reduced from 23% to 21%
1 April 2015	Single unified rate of 20% introduced.
1 April 2017	Single unified rate reduced from 20% to 19%

Companies have been charged CT since 1965. Before that, they were liable to income tax on their total income and to profits tax. The system introduced in 1965 charged a uniform rate on all profits and an additional charge to income tax was made when profits were distributed.

The small companies’ rate (SCR) was introduced in 1973 to allow companies with profits below a specified lower limit to pay a lower rate of CT. A system of marginal relief enabled a smooth progression in the average tax rate from the SCR to the main rate as profits increased.

In 1973, a ‘partial imputation system’ was introduced to mitigate the double tax charge when profits are distributed. This was achieved by the twin mechanisms of Advance Corporation Tax (ACT) and tax credits. A company paid ACT when it paid a dividend. ACT could be set off, within a limit, against the CT liability of the accounting period. The remaining tax liability was called “mainstream” Corporation Tax (MCT). ACT was used to finance the tax credit for the shareholder receiving the dividend. A company only had to pay ACT on the excess of its franked payments over its franked investment income. A subsidiary could pay a dividend to its parent company without paying ACT and a parent could surrender ACT it had paid to a subsidiary company.

A company that could not set off the whole of the ACT paid against the tax charged on its profits had “surplus ACT”. This could be carried back for up to 6 years (up to 2 years before 1984) to reduce tax liability in earlier accounting periods, or it could be carried forward without time limit. In any accounting period, the amount of ACT set against tax on profits was limited to the amount that, together with the distribution to which it related, absorbed the whole of the profits of the accounting period.

ACT was payable on the 14th day of the month following the end of the quarter in which the distribution was made and mainstream CT was payable 9 months after the end of the accounting period. Before 1990-91, payment rules allowed a longer period before mainstream tax was paid. Some companies paid mainstream tax up to 21 months after the end of their accounting periods.

In October 1993, CT Pay and File was introduced. Under this administrative system, after nine months a company was required to pay its own estimate of its mainstream CT liability, rather than an estimate produced by the tax inspector. After twelve months, it submitted a standard return giving the basis of the liability. Further payments and repayments could be made when a final assessment of tax was agreed. This system also introduced some changes to accounting methods that increased the recorded levels of both payments and repayments, but had no effect on net receipts.

In July 1997, a series of reforms of tax credits and CT payments was introduced. Payments of tax credits to pension schemes and UK companies were abolished on dividends paid on or after 2 July 1997 and the remaining payments of tax credits were cut from 6 April 1999. ACT was abolished for dividends paid on or after 6 April 1999, as were Foreign Income Dividends that allowed companies to pay dividends without tax credits.

In 1999, CT Self Assessment was introduced. A system of Quarterly Instalment Payments (QIPs) was introduced for large companies starting with accounting periods ending on or after 1 July 1999. The first instalment became due in month 7 of the accounting period with further instalments due in months 10, 13 and 16 with any balance to be paid 9 months after the end of the period. Transitional arrangements phased in the change over four years. Quarterly payments were first made in January 1999 and the first large amounts were paid in July 1999.

In April 2000, a new starting rate of 10% was introduced on profits up to £10,000, with a higher marginal rate on profits in the band £10,000 to £50,000. In April 2002, the starting rate was reduced to zero and the small companies’ rate of CT to 19%. In April 2004, a 19% rate of CT was introduced on profits distributed to persons who are not companies, commonly referred to as the Non-Corporate Distributions Rate (NCDR). The 0% starting rate led to a significant growth in tax-motivated incorporations.

From April 2006 the NCDR and 0% rates were replaced with a single rate set at the small companies’ rate of 19%.

From 1 April 2007 the small companies’ rate increased from 19% to 20%.

From 1 April 2008, the main rate decreased from 30% to 28% and the small companies’ rate increased from 20% to 21%.

From 1 April 2011, the Small Profits Rate (SPR), formerly known as Small Companies’ Rate, decreased from 21% to 20% and compulsory online filing for Company Tax returns was introduced.

Between 1 April 2011 and 1 April 2014, the main rate decreased from 28% to 21% (see Table 1 above).

From 1 April 2015, a single unified rate of 20% was introduced.

From 1 April 2017, the unified rate was reduced to 19%.

2.7 The Bank Levy

The Bank Levy is an annual charge based on the equity and liabilities reported in year-end balance sheets, for periods of account ending on or after 1 January 2011. The Bank Levy applies to the following:

• UK banks, banking groups and building societies
• Foreign banking groups operating in the UK through permanent establishments or subsidiaries
• UK banks and banking sub-groups in non-banking groups

No charge arises on the first £20 billion of chargeable equity and liabilities of the relevant period, which in practice means that only banks with a large operating presence in the UK pay the Bank Levy.

The Bank Levy is returned to HMRC as part of the supplementary pages to the CT600 company tax return. Liabilities and receipts are recorded on the HMRC COTAX system. All companies subject to the Bank Levy are deemed to be ‘large companies’ for payment purposes and therefore all liabilities are paid as quarterly instalments under the same provisions as CT.

Bank Levy liabilities are excluded from the CT liabilities in this publication.

2.8 The Bank Surcharge

The Bank CT Surcharge, commonly known as the Bank Surcharge, was introduced in The Finance Act (No 2) 2015 to levy a surcharge on the profits of banking companies from 1 January 2016.

The Bank Surcharge applies to all banking companies and building societies within the scope of the charge to UK CT.

The surcharge profits are calculated on the same basis as for CT but before the offset of losses that arise before the commencement date or from non-banking companies, and before the surrender of group relief from non-banking companies. R&D expenditure credits are excluded from the surcharge. The surcharge also applies to any chargeable profits of a Controlled Foreign Company (CFC) which are apportioned to a banking company.

There is an annual allowance of £25 million available to banking groups or, where a group has only one banking company or the banking company is not in a group to that banking company alone.

The Bank Surcharge is paid alongside a company’s liability to CT. Liabilities and receipts are recorded on the HMRC COTAX system.

2.9 Bank Surcharge Rates

From 01 January 2016, a single rate of 8% on chargeable profits over £25 million.

2.10 Banking Sector Tax Receipts Statistics

HMRC Official Statistics on CT and PAYE receipts from the Banking Sector were published for the first time on 31 August 2011. The latest publication is available on the HMRC National Statistics website.

3. Data sources and methodology

This section explains some key features of CT that are useful in understanding the statistical tables.

3.1 Coverage

The Corporation Tax (CT) statistics publications provide annual statistics on UK CT receipts and liabilities, including broad industry sector breakdowns.

The first table covers CT receipts, whereas the remaining tables focus on companies’ CT liabilities based on their tax returns and assessments. The data used to produce these statistics, both for receipts and liabilities, comes from the HMRC administrative system for company taxation, COTAX.

This publication only includes figures for previous years. Forecasts of future CT receipts are produced and published by the Office for Budget Responsibility, and can be found on their website.

3.2 Data sources

Receipts

The data for CT receipts and Bank Levy receipts (Table 11.1A) comes mainly from postings recorded on the HMRC COTAX administrative system. These are downloaded every night into databases for analysis the following day.

The total CT net receipts figures are checked for consistency with the latest financial outturn position (whether before or after finalisation of the HMRC Trust Statement, depending on the timing of the release). Receipts figures are subject to ongoing quality assurance and daily scrutiny as part of the HMRC role in monitoring the public sector finances.

Liabilities

The data for CT liabilities (Tables 11.1B – 11.10) comes from CT assessments and returns as recorded on the HMRC COTAX administrative system.

For years shown in the tables prior to 2005-06, a stratified sample consisting of 100% of ‘large’ companies and 10% of ‘small’ companies’ were extracted from COTAX on a monthly basis for analysis.

For the purposes of compiling the sample dataset, the definition of a ‘large’ company was based on a number of criteria including profits, losses, allowances and turnover. All companies served by the HMRC Large Business Service (LBS) were included in the sample, as were all companies that were part of a Group Payment Arrangement (GPA). Taken together, these ‘large’ companies accounted for around 80% of the total CT liability.

For years shown from 2005-06 onwards, data from 100% of companies is used.

The available data for each company is as recorded on the Company Tax Return (CT600) form, including any modifications or additions made in subsequent assessments. The CT600 form contains a systematic record of the company’s CT calculations, starting with its income and chargeable gains and taking into account any relevant deductions and reliefs.

Checks carried out on the data include the following:

• COTAX detects calculation errors in the tax return and displays messages on the screen.
• Further automated checks take place when loading data into the analysis database. Inconsistencies are automatically ‘repaired’ if possible; otherwise the record is flagged as invalid.
• Analysts check that the number of records loaded into the analysis database is as expected.
• Reports are run showing the cases with the largest profits and losses. These are examined individually. Records deemed to be incorrect are adjusted in the analysis database.
• Any large changes in receipts or liabilities figures from one statistical release to the next are investigated.
• Total CT receipts figures are checked for consistency with the latest HMRC financial outturn position.

A large company may trade at many different locations throughout the UK. However, its CT return will be made on behalf of the whole company and linked to its registered office address. A geographical breakdown would show all of the company’s profits and tax liability as originating at the location of the registered office, which does not reflect the company’s actual business activities. Therefore, CT National Statistics are only produced at national level. Statistics showing sub-national breakdowns of tax receipts can be found at the Disaggregation of HMRC tax receipts web page of GOV.UK.

Because all of the necessary data for the CT National Statistics is obtained from an administrative data source (COTAX), there is no additional burden on companies or HMRC tax inspectors to provide information.

Tables 11.4, 11.5, 11.7 and 11.10 include breakdowns by industrial sectors, e.g. ‘Agriculture, Forestry and Fishing’ and the classification is based on the UK Standard Industrial Classification (SIC) 2007. Companies do not report their SIC 2007 sector to HMRC as part of their CT return or registration so they have been assigned to a sector based on data from external sources; this is predominantly matching records to the ONS’s Inter-Departmental Business Register (IDBR) survey, but if it is not possible to match to this, then it is based on information provided by companies to Companies House. There were some minor changes to methodology for the 2020 publication to improve the reliability of the SIC sector 2007 analysis and the efficiency of the publication process, but this has increased the number of companies where the sector is unknown. From this point, the amount of manual assignment of SIC codes to companies who did not match to either of the above data sources, has also been reduced. Some categories have been amalgamated in order to protect taxpayer confidentiality.

Further information about the IDBR can be found on the Inter-Departmental Business Register web page of the Office for National Statistics website.

Further information about industrial classification by the ONS and by Companies House can be found at the following links:

• The current Standard Industrial Classification (SIC) that’s located on the Office for National Statistics website.
• A condensed list of SIC codes on GOV.UK, for providing Companies House with a description of your company’s nature of business.

3.3 Methodology

CT returns are allocated to financial years according to the end date of the accounting period. For large companies these end dates are generally 31 December or 31 March in respect of calendar or financial year accounting periods. CT returns are normally due twelve months after the end of an accounting period, and then it takes a further period to capture the data electronically. Allowing for this and late returns, there is some delay before the estimates for a relevant year become available. In this current release, the most recent available estimates for liabilities relate to 2018-19.

For companies where data is not available for a particular year, profits, deductions and tax liabilities are imputed by extrapolation from a recent year’s data. Companies where no data has been received for any year (‘inactive cases’) are excluded prior to the imputation stage. Grossing is then applied to scale up the sample results to represent the entire population.

For the latest published year for those companies with net chargeable profits, the percentage of imputed cases is around 5%.

CT assessments are subject to revision and although the majority of assessments are finalised within two years, there are exceptional cases which can take much longer. There is, therefore, no specific point at which all the CT liabilities for a particular year can be considered as ‘final’.

The statistics are revised each year for the five years before the latest published year. Reasons for changes in liabilities include:

• revisions to the assessment, for example to carry back losses from later years, or because of an HMRC enquiry
• amendments to correct errors in the original assessment
• late submission of the company’s tax return, replacing the imputed figures in the previous release of the statistics

For the calculations necessary to show the profits breakdown by small profits rate, marginal small profits rate and main rate in Table 11.3, an average effective tax rate is calculated for each company. This includes companies whose accounting period spans two financial years and/or whose accounting practices mean they can charge certain parts of their activity at the main rate. This calculation is undertaken as part of the database production process by dividing the tax by the profits chargeable across the full company. This effective tax rate is used to classify companies by CT rate, resulting in some companies being counted as ‘small profits rate’ on average even if some parts of their activity would be taxed at the higher rate.

The total CT liability typically decreases from the time of initial publication to the revision in the following year’s publication. Changes in recent years have been up to 2% per year in either direction. These changes were observed in the statistics in recent years. It should not be assumed that the same pattern of changes will necessarily apply in future.

Table 11.2 is organised to follow the main stages of the tax assessment, starting with gross taxable trading profits (or ‘gross case 1 profits’) reflecting the impact of the tax rules in allowing or disallowing expenses which may be recorded against profits in companies’ commercial accounts. Capital allowances are then set against these trading profits, as are trading losses brought forward from previous years. Other taxable income and net capital gains are added in but then offset by any trading losses in the same period. Charges, other allowable deductions and group relief (i.e. losses surrendered by one member of a company group to set against the profits of another group member) are then subtracted, to obtain profits chargeable to CT.

The next line depicts the total CT charge, before reliefs are applied, taking into account whether the company was taxed at the main rate or the small profits rate. The following line shows marginal relief for companies with profits between the upper and lower thresholds. There is then ACT set off, double taxation relief, which allows for tax companies which may have already paid on overseas profits in the countries where those profits were earned, and other minor adjustments.

Note that the liabilities figures in Table 11.2 are consistent with those in Table 11.1B, though 11.1B includes very small amounts of overseas company liabilities within the industrial and commercial category.

The figures for Capital Allowances in Tables 11.9 and 11.10 are before any claw-back for balancing charges and are therefore higher than the corresponding figures shown in Tables 11.3 to 11.5 (which do take account of this).

3.4 Potential sources of error

Possible sources of error in the published statistics include the following:

• Data capture errors: Companies may make errors entering their information onto the CT600 Company Tax Return form, whether this is done on paper or electronically. This data is subsequently entered onto the COTAX system either manually or by electronic transmission, which is another point at which data may be altered due to human or software error. There is a risk that errors involving very large profits or tax amounts may distort the overall statistics. To mitigate this, checks are carried out and any incorrect large values that are detected are altered in the analysis database before the statistics are produced.
• Other data quality errors: Companies are classified by industrial sector using the SIC 2007 standard and the Summary Trade Classification (STC) codes. The quality of the statistics is limited by the accuracy and consistency with which these codes have been assigned. To deal with known issues some adjustments and corrections are made before the statistics are produced.
• Imputation errors: When estimating tax liabilities for the latest available year, figures are not necessarily available for all companies. Missing cases are imputed, taking into account the figures from previous years. In a volatile economic climate, where companies’ results fluctuate widely from year to year, such imputed figures may not always give an accurate estimate. Statistics that are more accurate will be available a year later, by which time almost all companies will have completed returns and assessments.
• Data processing errors: It is possible that errors exist in the programs used to analyse the data and produce the statistics. This risk is reduced through developing a good understanding of the complexities of CT, and thoroughly reviewing and testing the programs that are used.

4. Guidance on specific tables

4.1 Table 11.1A

• Receipts are gross of company tax credits from 2002-03 onwards. Information on company tax credits can be found in HMRC’s monthly receipts statistics
• To ensure that the total HMRC receipts categorised in this table are in line with the HMRC trust statement totals, an estimate has been made of distribution of uncategorised payments between the industrial sectors.
• For Onshore CT, the category of ‘Other industrial and commercial’ includes overseas companies.
• Bank Surcharge was introduced from 1 January 2016. Payments began to be received from January 2016 onwards. 2015-16 bank surcharge payments are included in ‘Financial excluding life assurance’ due to their small value.
• Offshore CT quarterly instalments and balancing payments for 2002-03 and subsequent years include the supplementary charge in respect of ring fence trades. These values can be found on the Statistics of government revenues from UK oil and gas production webpage of GOV.UK.
• Net receipts figures for Advanced Corporation Tax are no longer collected separately from 2010-11 onwards.
• Total Corporation Tax Receipts (excluding Bank Surcharge) is the total CT reported on the HM Revenue & Customs receipts statistics webpage of GOV.UK.
• The Corporation Tax receipts do not include Diverted Profit Tax charging notices as this is a different head of duty. Additional Corporation Tax arising from behavioural change by businesses in response to the introduction of the Diverted Profit Tax will be included in these receipts.
• Bank Levy was introduced from 1 January 2011. Payments began to be received from 2011-12 onwards.

4.2 Tables 11.3 to 11.5

• A single company may have several different sources of income so trading profit and other income will overlap in tables 11.3, 11.4 and 11.5.
• Figures for the latest year are subject to the most change when the figures are next updated due to revisions in assessments.
• The ‘number of cases’ is the number of companies with positive income (gross trading income, other income or gains)
• The analyses by industry in tables 11.4 and 11.5 use the UK Standard Industrial Classification 2007. Some categories have been amalgamated and some cells suppressed in order to protect taxpayer confidentiality.
• The figures for capital allowances are the amounts that companies claim in the period, less balancing charges.
• Overall net trading profits will exceed gross trading profit minus capital allowances since, if this subtraction results in a negative value for an individual company, the net trading profits are deemed to be zero and not negative. Losses brought forward are not deducted in arriving at net trading profits. They and losses of the current period, so far as they are allowed, are included in ‘Deductions allowed’.
• In relation to rates at which profits are charged, an individual company can pay different rates on the total chargeable profits and so an average across accounting periods is calculated for simplicity.
• Total tax charge includes a supplementary charge on UK continental shelf profits of oil and gas companies.
• Corporation tax payable includes bank surcharge levied on profits of banking companies in accounting periods beginning on or after 1 January 2016.
• The analyses by industry use the UK Standard Industrial Classification 2007. Some categories have been amalgamated in order to protect taxpayer confidentiality.
• Figures for Advance Corporation Tax set-off are not shown at industrial sector level in order to protect taxpayer confidentiality.
• Other reliefs set against tax includes double taxation relief, marginal small companies rate relief, income tax set off and non-standard tax reduction.

4.3 Tables 11.6 to 11.8

• The analyses by industry use the UK Standard Industrial Classification 2007. Some categories have been amalgamated in order to protect taxpayer confidentiality.
• The figures are consistent with similar figures shown in Tables 11.3, 11.4 and 11.5.

4.4 Tables 11.9 and 11.10

• Tables 11.9 and 11.10 give estimates of the capital allowances due each year whether or not they were used against profits of the year shown. The totals differ from those in Tables 11.3 to 11.5, mainly because the latter are net of balancing charges.

4.5 Table 11.9

• Separate information on initial and first year allowances is not available from 1988-89.
• Figures for 1979-80 and subsequently are on a revised basis not directly comparable with earlier years.
• Figures for 1982-83 and subsequently include Public Corporations.
• From 2005-06 the figures have been evaluated using data for all companies rather than a sample.
• With relation to plant, machinery and vehicle assets, from 2008-09 this includes Annual Investment Allowance (AIA) qualifying expenditure (see Table 11.10).
• Industrial building allowance was phased out from April 2011.

4.6 Table 11.10

• The analyses by industry use the UK Standard Industrial Classification 2007. Some categories have been amalgamated in order to protect taxpayer confidentiality.
• Annual Investment Allowance (AIA) includes qualifying expenditure incurred on or after 1 April 2008. Companies in groups are entitled to only a single AIA claim between them in respect of qualifying expenditure.
• The table relating to ‘Other assets’, includes Industrial Buildings Allowance.

5. Glossary

5.1 Accounting Period

The period used to determine the company’s taxable profit for CT; it normally matches the company’s financial year.

5.2 Advance Corporation Tax (ACT)

Component of CT levied on dividend payments and usually payable in the following quarter. ACT was abolished in 1999.

5.3 Capital Allowances

Capital allowances enable a company to deduct (write off) the cost of its capital assets such as machinery, computers, equipment or vehicles against its taxable profits for CT. A portion of the cost is deducted each year over a specified period.

5.4 Chargeable Gains

Chargeable gains are the profits or gains made by a company when it sells or disposes of an asset, such as shares or property. Companies do not pay Capital Gains Tax; instead, the gains are treated as taxable profits for CT purposes.

5.5 Company Tax Return

A company or organisation that is subject to CT has to submit a Company Tax Return to HMRC for each accounting period. The Company Tax Return consists of a CT600 form with relevant supplementary pages, accounts and computations.

5.6 COTAX

COTAX is the HMRC administrative computer system for company taxation. It holds records of companies’ tax returns and assessments, as well as CT receipts.

5.7 Corporation Tax Liabilities

The amount of CT that companies have to pay to HMRC. CT liabilities are considered to be accrued in the financial year of the end date of the company’s accounting period.

5.8 Corporation Tax Receipts

The amount of CT collected by HMRC

5.9 Main Rate

The rate of CT paid by companies with profits above the lower profits limit. Companies with profits between the lower and upper profits limit are taxed at main rate but can usually claim Marginal Relief (see below).

5.10 Mainstream Corporation Tax (MCT)

Between 1973 and 1999, MCT was the remaining amount of CT payable, after the Advance Corporation Tax (ACT) amount had been set off.

5.11 Marginal Relief (previously known as Marginal Small Companies Relief)

This can be claimed by companies with taxable profits between the lower and upper profit limits, to enable a smooth transition between the small profits rate and the main rate of CT.

5.12 North Sea Oil

Now called ring-fenced oil and gas companies – see below.

5.13 Quarterly Instalment Payments (QIPs)

Since 1999, large companies have been required to pay their CT by quarterly instalments.

5.14 Ring-fenced oil and gas companies

Companies involved in the exploration for, and production of, oil and gas in the UK and on the UK Continental Shelf (UKCS) are liable for Offshore CT, which is comprised of Ring-Fence Corporation Tax (RFCT) and the Supplementary Charge (SC). Collectively, these are known as ring-fenced oil and gas companies.

Previously, these were referred to as ‘North Sea Oil’. However, not all receipts and liabilities come from activities exclusively in the North Sea and therefore we have renamed this sector. Further information can be found at the Oil and gas: Ring Fence Corporation Tax web page of the GOV.UK website.

5.15 Set-offs

Set-offs are reductions to a company’s CT liability because the company has already suffered tax in another form, such as Advance Corporation Tax (ACT) or Income Tax. Another set-off is double taxation relief, which may apply if the company has paid tax abroad on part of its profits. Marginal Relief can also be considered as a set-off.

5.16 Small Companies’ Rate (SCR)

The rate of CT paid by companies with profits below the lower profits limit. Now known as Small Profits Rate (SPR) – see below.

5.17 Small Profits Rate (SPR)

Since April 2010, the lower rate of CT was called the Small Profits Rate (SPR) rather than Small Companies’ Rate (SCR). This makes clear that it is the size of the profits, rather than the size of the company, that determines the tax rate to be applied.

5.18 Starting Rate

Between 2000-01 and 2005-06, a starting rate of CT applied to companies with taxable profits less than £10,000. Companies with profits between £10,000 and £50,000 could claim marginal starting rate relief, which worked in a similar way to the Marginal Relief described above.

5.19 Standard Industrial Classification of Economic Activities (SIC)

The United Kingdom Standard Industrial Classification of Economic Activities (SIC) is used to classify business establishments and other standard units by the type of economic activity in which they are engaged. The version of these codes (SIC 2007) adopted by the UK as from 1st January 2008 is used in this publication.

5.20 Summary Trade Classification (STC)

Summary Trade Classification (STC) codes are 2-digit codes used by HMRC to classify companies by their type of business activity. This classification was based on the Standard Industrial Classification SIC (92).

5.21 Trust Statement

The HMRC Trust Statement is a statutory account, which shows the revenue and expenditure related to the taxes and duties collected by HMRC. It is audited by the National Audit Office, and published and laid before Parliament annually.