Understanding the different types of business taxes in the UK

Navigating the UK tax landscape can be challenging for business owners. A clear understanding of the various types of business taxes is essential, not just for compliance, but for informed decision-making that supports sustainable growth. At Ballards, our team of corporate tax specialists is here to simplify the complexities and help your business remain on the front foot.

Key types of business taxes in 2025

The tax obligations for UK businesses vary depending on structure, size, and operations. Below is an up-to-date overview of the main business taxes you may need to manage:

Corporation tax

Limited companies operating in the UK are subject to corporation tax on their taxable profits.

• Current rate (as of April 2025): 25% for profits above £250,000
• A small profits rate of 19% applies to companies with profits under £50,000, with marginal relief available for those in between.
  All companies must file a Corporation Tax Return (CT600) annually, reporting profits and claiming relevant reliefs.

Value added tax (VAT)

VAT is a tax on the sale of goods and services.

• Registration threshold (2025): £90,000 annual taxable turnover
• Standard rate: 20%
• Reduced rate: 5% (e.g. for home energy)
• Zero rate: 0% for certain items (e.g. basic food, books)
  VAT-registered businesses must file periodic returns (usually quarterly), reclaiming VAT on purchases and paying VAT collected on sales.

Income tax (for sole traders and partnerships)

Self-employed individuals and partners pay income tax on their share of business profits.

• Rates (2025/26):
  • 20% basic rate
  • 40% higher rate
  • 45% additional rate
• Income tax is reported through the Self Assessment system, with returns typically due by 31 January each year.

National insurance contributions (NICs)

NICs fund state benefits and apply to both employers and employees.

• Employers: Pay Class 1 NICs on employee earnings
• Employees: Have NICs deducted from their wages
• Self-employed: Pay Class 2 and Class 4 NICs based on profits
  Recent changes have aligned NIC thresholds with income tax bands, streamlining calculations.

Other relevant business taxes

• Stamp Duty Land Tax (SDLT): Payable on property purchases over certain thresholds
• Business Rates: Tax on commercial property use, billed by local authorities
• Construction Industry Scheme (CIS): Applies to contractors and subcontractors
• Customs Duties and Import VAT: Relevant for businesses trading internationally

Why expert tax advice matters

The UK tax system evolves frequently. With ongoing changes to thresholds, reliefs, and compliance requirements, professional advice is more important than ever.

Ballards tax specialists can help you:

• Identify your specific tax obligations
• Develop a tax-efficient business strategy
• Ensure timely and accurate tax filings
• Prepare for HMRC audits or investigations
• Stay current with legislative and policy changes

Our goal is to give you confidence and clarity in your business tax affairs, so you can focus on running and growing your business.

Partner with Ballards for tax confidence

We offer a full suite of corporate tax services tailored to your business’s needs:

• Strategic Tax Planning
• Preparation and Submission of Tax Returns
• HMRC Enquiry Support and Representation
• VAT Compliance and Advisory Services
• Business Structure Advice and Corporate Restructuring

Let our experts take the stress out of compliance and help you stay proactive in managing your tax position.

Need support?
Reach out to Ballards today to schedule a consultation. Our team is ready to help you navigate your business’s tax obligations and optimise your financial strategy.

Disclaimer: This insight does not constitute financial or legal advice. All businesses have different considerations, and professional advice should be sought before acting upon any of the information contained in this insight.