“We know that two-thirds of British businesses do not make a profit over £10,000 every year but are nonetheless subjected to corporation tax.”
Nigel Farage, 22 November 2019
At the Brexit Party’s manifesto launch this morning, leader Nigel Farage pledged to remove corporation tax on business profits under £10,000.
Corporation tax is a tax on limited businesses, and the main rate is set at 19% of profits.
Justifying the proposal, Mr Farage said in the Telegraph this morning that: “two-thirds of British businesses do not make a profit over £10,000 every year but are nonetheless subjected to corporation tax.”
He made a similar claim in his speech this morning, that a million companies do not make a profit of over £10,000 a year.
This is incorrect.
Mr Farage seems to have confused the number of limited businesses who have to pay up to £10,000 of corporation tax (one million out of about 1.5 million companies in 2017/18) with the number of businesses which make profits of up to £10,000 (and therefore would only be liable to pay corporation tax up to £1,900, on the 19% rate).
The Brexit Party correctly stated this statistic in their manifesto: “one million companies - some 66% of the total number - pay less than £10,000.”
The party’s pledge is not to stop all those companies paying corporation tax altogether, though. The Brexit Party confirmed to us that its pledge is that corporation tax would be waived for the first £10,000 of pre-tax profits, not the first £10,000 of tax owed.
We haven’t seen figures to show exactly how many companies have profits less than £10,000. A company with profits of £10,000 would normally pay £1,900 in corporation tax.
The available statistics show that 279,780 companies paid less than £1,000 in 2017/18 and 713,590 companies paid less than £5,000. So the number who will have profits of less than £10,000 will be somewhere between, and so fewer than half of the 1.5 million companies have profits of less than £10,000.