Corporation Tax rises with profit levels. Marginal relief bridges the gap, easing businesses from the 19% small profits rate to the 25% main rate.

The Corporation Tax Main Rate applies to companies with profits exceeding £250,000 and is currently set at 25%. For companies with profits up to £50,000, a Small Profit Rate (SPR) of 19% is applicable.

For profits between £50,000 and £250,000, a marginal rate of Corporation Tax is used to smooth the transition between the lower and upper limits. The lower and upper thresholds are also adjusted proportionately for short accounting periods of less than 12 months and for companies with associated entities.

Marginal relief gradually increases the effective Corporation Tax rate from 19% at profits of £50,000 to 25% at profits over £250,000. To calculate the Corporation Tax due, you multiply your profits by the main rate of 25% and subtract the marginal relief. For the current 2025 fiscal year, the marginal relief fraction is 3/200.

Chancellor Rachel Reeves delivered her first Spending Review to Parliament last week, setting out the government’s financial priorities for the next three years. Her approach signals a shift away from austerity towards a strategy of state-backed investment, aimed at boosting growth and productivity while maintaining fiscal credibility.

The review promises a substantial increase in capital spending, with key allocations for transport infrastructure, energy security, housing, and green technology. The government pledged a multi-year uplift in NHS and defence funding, while committing to invest heavily in rail, roads, and nuclear energy projects.

Day-to-day departmental budgets are set to grow modestly in real terms, but the largest gains will be in capital allocations. The spending framework also relies on projected efficiency savings of £14 billion, which will be used to fund some of the more ambitious commitments.

For UK businesses, the implications vary by sector. Construction and engineering firms can expect opportunities from increased infrastructure spending, particularly those aligned with green objectives and transport. Firms in digital healthcare, AI, and clean energy technologies may also see a benefit from targeted support and public procurement opportunities.

Technology businesses are likely to see some growth stimulus through investment in digital public services and AI infrastructure. Similarly, the life sciences and carbon capture sectors are expected to benefit from targeted research and development initiatives.

However, the business community remains cautious. The Spending Review comes at a time when government debt is at historically high levels, and market confidence is sensitive to fiscal overreach. Some forecasters have warned of a potential shortfall of up to £20 billion in the government’s medium-term plans, which could necessitate either tax increases or tighter departmental controls later this year.

There is also concern over the government’s reliance on efficiency savings to meet its commitments. While welcomed in principle, businesses and economists alike remain sceptical about how quickly those savings can be delivered in practice.

In summary, the Spending Review presents a growth-focused and investment-driven agenda. For business, it brings opportunities, particularly in sectors aligned with the government’s infrastructure, green and digital priorities. However, there are risks associated with delivering on these promises if forecasts fall short or efficiency measures do not materialise as planned.

BT has announced that it may exceed its previously stated target of cutting 40,000 jobs by 2030, as artificial intelligence (AI) becomes more central to its operations. The move comes as the company accelerates its cost-cutting programme and seeks to reorient itself in a changing telecoms landscape.

The CEO, Allison Kirkby, who took over in early 2024, has emphasised efficiency, automation, and simplification. Since then, BT has exited international operations, focused more tightly on its UK telecoms core, and made plans to separate out divisions like Openreach to unlock shareholder value.

The company is now embedding AI across key departments, including customer service, fault detection, and network operations. Automation of routine tasks is enabling BT to reduce headcount while aiming to improve efficiency and service delivery. AI-driven tools are being integrated into call centres and technical support functions, with a view to replacing human input for common troubleshooting and account management requests.

The financial rationale is clear. BT is in the midst of a £3 billion cost-reduction programme and has said that increases in employer national insurance contributions alone could cost it £100 million annually. Leveraging AI is seen as one of the few scalable methods of preserving margins while continuing to invest in infrastructure.

This restructuring has important implications across the telecoms sector. Job losses will be concentrated in customer-facing roles and back-office operations. At the same time, there is likely to be increased demand for skilled AI engineers, data analysts, and cybersecurity specialists.

Smaller providers and BT’s supply chain will need to adapt quickly. Companies offering AI systems, automation tools, and support services may find new commercial opportunities, particularly if BT’s adoption drives wider change in the sector.

The risk is that over-automation could impact customer service and employee morale. BT will need to strike a careful balance to maintain brand reputation and service levels, especially as it faces competition from a possible Vodafone–Three merger and new market entrants.

BT’s direction under Kirkby points to a leaner, more tech-led organisation. For investors, this may offer stability and long-term growth. For employees, it signals ongoing transformation and the need for reskilling. For the wider economy, it highlights how AI is moving beyond hype and directly reshaping corporate strategy and workforce planning.

Identity verification is now rolling out for directors, PSCs, and agents, with more filing roles to be included soon under new anti-fraud rules.

Companies House is beginning to roll out mandatory identity verification. This is part of wider reforms introduced by the Economic Crime and Corporate Transparency Act that was granted Royal Assent in October 2023. This legislation strengthens Companies House’s authority to prevent the misuse of corporate structures and tackle economic crime.

A key feature of the Act is the requirement for identity checks for individuals involved in company formation, management, or ownership in the UK. Eventually, anyone incorporating a company or being appointed as a director or a person with significant control (PSC) will be legally required to complete identity verification.

Authorised Corporate Service Providers (ACSPs)

Since 18 March 2025, any ACSP that is defined as an individual or organisation conducting Anti-Money Laundering (AML) supervised activities must verify their identity before they can register as an authorised agent with Companies House.

Since 8 April 2025, ACSPs that are registered as authorised agents are permitted to carry out identity verification on behalf of their clients. This means that only those registered as authorised agents will be allowed to submit filings on behalf of other businesses.

Directors and Persons with Significant Control (PSCs)

Also, since 8 April 2025, directors and PSCs are able to verify their identity voluntarily. Over time, this step will move from optional to mandatory, forming a required part of compliance when forming or managing a company.

Individuals Filing with Companies House

At present, identity verification is not compulsory for individuals submitting filings to Companies House. However, this will also change in due course, with verification becoming a statutory obligation in the future.

The BADR Capital Gains Tax rate has risen to 14% from April 2025 and will increase further to 18% in April 2026.

Business Asset Disposal Relief (BADR) offers a valuable tax advantage by applying a reduced rate of Capital Gains Tax (CGT) on the sale of a business, shares in a trading company or an individual’s interest in a trading partnership.

As part of the measures announced in the Autumn 2024 Budget, the CGT rate for gains eligible for BADR has increased. For disposals made on or after 6 April 2025, the CGT rate has risen from the previous 10% to a higher rate of 14%. This change is now in effect and applies to any qualifying disposals taking place within the 2025–26 tax year.

Another forthcoming increase to the CGT rate under BADR is set to take place from 6 April 2026. It will rise to 18%. This means that disposals qualifying for BADR on or after this date will face a significantly higher tax charge compared to the original 10% rate that had long been associated with the relief.

The lifetime limit for claiming BADR remains at £1 million. This means that individuals can still benefit from the relief more than once, provided the cumulative gains across all qualifying disposals do not exceed this threshold.

Changes have also been made to Investors’ Relief. Specifically, the lifetime limit for Investors’ Relief was reduced from £10 million to £1 million for qualifying disposals made on or after 30 October 2024. In addition, the CGT rates for Investors’ Relief have now been brought in line with those of BADR currently at 14% and increasing to 18% from April 2026.