Reform UK's corporation tax cut: what would a company save?
Cutting the headline rate of corporation tax from 25% to 20%, then to 15% — and scrapping the IR35 rules for the self-employed.
What's being proposed
Reform UK would cut the main rate of corporation tax — the tax companies pay on their profits — from today's 25% to 20% in the first year of a parliament, and then to 15% by the third year. Separately, it would abolish IR35, the rules that treat some contractors working through their own company as employees for tax. The party casts both as pro-business, pro-growth measures to attract investment and reward entrepreneurs.
Where it comes from
The main rate of corporation tax rose from 19% to 25% in April 2023 for companies with profits over £250,000, with a 19% small-profits rate kept for profits under £50,000 and a tapered "marginal relief" band in between. Reform argues a lower rate would make the UK more competitive; critics note corporation tax raises tens of billions a year and question whether the growth would offset the cost, and whether abolishing IR35 would reopen tax-avoidance routes.
How it would work
- The main rate (profits over £250,000) falls from 25% to 20%, then 15%.
- The calculator keeps today's 19% small-profits rate and marginal-relief band and applies Reform's lower main rate over the top; if the main rate drops below the small-profits rate, the lower rate simply applies throughout.
- IR35 would be abolished, changing how contractors are taxed (not modelled here).
The case for and against
Supporters argue
- A lower rate can attract investment and make the UK more competitive internationally.
- It rewards profitable, growing businesses and could support wages and jobs over time.
- Scrapping IR35 removes a complex, disliked set of rules for contractors.
Critics argue
- Corporation tax raises tens of billions a year; a deep cut is expensive and may not pay for itself.
- The benefit flows to profitable companies and shareholders, not necessarily to workers.
- Abolishing IR35 could revive "disguised employment" tax avoidance.
What would a company save?
Enter your company's annual taxable profit to compare today's corporation tax with Reform's proposed rate. Switch between the first-year (20%) and third-year (15%) targets.
Your company
Corporation tax (2025/26): 19% on profits up to £50,000, 25% on profits over £250,000, with marginal relief tapering between the two (an effective 26.5% marginal rate in that band). Reform would cut the main rate to 20%, then 15%; this tool keeps the 19% small-profits rate and marginal relief and applies the lower main rate, falling back to a flat lower rate if it drops below 19%. IR35 abolition and any change to the small-profits rate are not modelled. Not tax advice.
Sources & further reading
- Reform UK — the party's policy platform, including corporation tax and IR35.
- GOV.UK — current corporation tax rates and marginal relief.
- Chartered Institute of Taxation — analysis of Reform's tax proposals.
Figures are illustrative and based on reported proposals; rates and rules may change. General information, not financial, legal or tax advice.
Frequently asked questions
How much corporation tax would my company save?
Enter your annual taxable profit in the calculator above and choose the 20% or 15% phase to see the saving against today's rates.
What are Reform's proposed corporation tax rates?
Cut the main rate from 25% to 20% in the first year of a parliament, then to 15% by the third year.
Is Reform's corporation tax cut government policy?
No — it's a Reform UK proposal, not law. Corporation tax is currently 25% (main rate) with a 19% small-profits rate.
What is IR35?
IR35 is a set of rules that treats some contractors working through their own company as employees for tax purposes. Reform would abolish it; this calculator does not model that change.