HMRC’s latest corporation tax statistics show total corporation tax receipts in 2024/25 rose for the fourth consecutive year, and total corporation tax liabilities in 2023/24 increased for the third consecutive year. While the government may be keen to attribute this to the UK economy’s post-pandemic recovery, a key driver of the growth in corporation tax receipts and liabilities was the increase in the main rate of corporation tax from 19% to 25% in April 2023. Therefore, the Chancellor may not be able to rely on similar growth in corporation tax receipts in future years.

While corporation tax liabilities in 2023/24 increased by 9% compared to the prior year, total profits chargeable to corporation tax decreased by 6% over the same period. This appears to be due to an increase in tax losses offset against profits, potentially indicating that companies are utilising losses built up during the pandemic.

The financial and insurance industry was the biggest contributor to corporation tax receipts in 2024/25 and has been for a number of years. Banks are also subject to the bank levy and bank surcharge, and in its Corporate Tax Roadmap the government committed to keeping the UK’s bank tax regime under review. Calls by a thinktank for a new tax on the quantitative easing-related reserves of banks may spark interest in the Treasury as a way to increase tax revenues without breaking manifesto pledges. However, given the tax burden already faced by banks, such a move could impact the City’s competitiveness.

Historically, governments have also looked to the energy sector as a way to raise tax revenues. In 2024/25, revenue from the energy profits levy (EPL) fell by 20% compared to 2023/24, with a 34% drop in offshore corporation tax receipts during the same period. While lower oil and gas prices may explain part of this decrease, several firms have announced that they are looking to end their operations in the North Sea due to their UK tax burden.

The industry’s trade body, Offshore Energy UK, has called for a replacement to the current EPL that encourages growth and investment. Earlier this year, the government consulted on a new permanent mechanism to replace the EPL when it ends in 2030. The industry will be hoping that details of the new regime will be announced during the budget.

The government has been vocal in its aim to increase business investment in the UK. In 2023/24, total qualifying expenditure for capital allowances increased for the third year in a row, but 47% of capital allowances claims were made by just c.350 companies. Although the government may be achieving its aim of encouraging business investment, this appears to be highly concentrated.

These latest corporation tax statistics might provide food for thought for the government, which committed to a stable and predictable corporation tax regime. Although the Chancellor could be tempted to raise additional tax revenues from some sectors, these statistics show that such measures may not always play out as expected.

Related insights