Note: The small profits rate has applied up to different thresholds over time. Bank rate is the main rate of corporation tax plus the bank surcharge. North Sea oil and gas production is subject to ‘ring-fence’ corporation tax (RFCT) and, since 2002, a supplementary charge (SC), which are assessed on a different tax base from standard corporation tax. PRT is petroleum revenue tax, which applies to North Sea oil and gas fields developed before 16 March 1993 (though the rate has been zero since 1 January 2016). For these fields, the tax rate is calculated as {PRT rate + [(RFCT rate + SC) x (1 – PRT rate)]}. The small profits rate for North Sea oil and gas profits is not shown in the chart. The horizontal axis has April of each year marked; as shown in the chart, some changes to North Sea tax rates took effect in other months.
Source: IFS Fiscal Facts.
There is a strong case to tax business income at the same rates as employment income – if the tax base is also reformed.
There are reasons to promote entrepreneurship, but low headline tax rates on income from business are poorly targeted at that goal.