The small profits rate of corporation tax remains frozen at 19 % for profits up to £50,000, with the main rate at 25 % above £250,000. The thresholds have not been increased since April 2023, despite inflation and wage growth pushing thousands more SMEs into the higher band every year. The Office for Budget Responsibility’s November 2025 Economic and Fiscal Outlook estimates that fiscal drag from frozen thresholds will drag an additional 180,000 businesses into the 25 % rate by 2028–29 – an effective tax rise of £1,500–£4,000 per year for many small limited companies.
For a typical family-run limited company with £80,000 profit – a plumbing firm, a local garage, or a small consultancy – the frozen threshold means an extra £1,200 in corporation tax compared to 2023. That is money not reinvested in tools, vans, or staff. The British Chambers of Commerce Q4 2025 Quarterly Economic Survey shows that 58 % of SMEs cite corporation tax as a top-three barrier to growth, with 41 % saying they have delayed investment decisions because of the effective rate rise.
Large corporations benefit from complex reliefs and international structuring. Small limited companies – the ones that employ 40 % of the private-sector workforce – get no such help. The freeze is quietly taxing growth.
The solution is simple and targeted:
- Raise the small profits rate threshold to £100,000 with immediate effect.
- Keep the 19 % rate on profits up to this new limit.
- Estimated cost to the Treasury: £480 million a year – less than 0.5 % of the £90 billion corporation tax take and fully recouped within three years through higher investment, employment, and economic growth (OBR modelling of threshold increases).
This is not a giveaway; it is fairness. The 19 % rate was introduced in 2017 to encourage small-company growth. Raising the threshold restores that original intent without complexity or loopholes.
Stop penalising small limited companies for growing. Give them the tax certainty they need to invest and create jobs.
The 1832 Club is fighting for these changes. The more members we have, the louder our voice in Westminster.
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