What is Corporation Tax?

Corporation Tax is the tax a UK limited company pays on its profits — trading profits, investment income and chargeable gains. There's no bill sent to you: the company must calculate its own tax, report it on a Company Tax Return (CT600) and pay HMRC by the deadline.

What are the Corporation Tax rates?

For the financial year from April 2026: 19% (small profits rate) on profits up to £50,000, 25% (main rate) on profits over £250,000, and 25% reduced by marginal relief in between — an effective 26.5% on each pound between £50,000 and £250,000. The limits are shared between associated companies.

When do I pay Corporation Tax?

Payment is due 9 months and 1 day after the end of your accounting period; the CT600 return is due 12 months after the period ends. So the tax is actually due before the return — which is why the accounts and return are best prepared soon after year end.

How do I reduce my Corporation Tax bill legitimately?

By claiming everything you're entitled to: all allowable business expenses, capital allowances on equipment (usually 100% via the Annual Investment Allowance), employer pension contributions, and any available reliefs and losses. Most overpayment comes from missed expenses and unclaimed allowances, not aggressive planning.

What if my company makes a loss?

You still file a return if HMRC has issued a notice. Trading losses can generally be carried forward against future profits, or in some cases carried back against the previous year's profits for a refund — which is why recording losses properly on the return matters even when there's no tax to pay.

The Complete Guide to Corporation Tax (2026/27)

Corporation Tax computation and CT600 filing for a limited company, in navy and gold

Registering for Corporation Tax

A new company must register with HMRC within 3 months of starting to do business — which includes buying, selling, advertising or employing, not just invoicing. A dormant company registers only when it starts trading. Miss the window and HMRC can charge a ‘failure to notify’ penalty.

How to register for Corporation Tax

The rates and marginal relief

Profits	Rate	Effective rate on next £1
Up to £50,000	19% small profits rate	19p
£50,000–£250,000	25% less marginal relief	26.5p
Over £250,000	25% main rate	25p

The £50,000 and £250,000 thresholds are divided between associated companies — run two companies and each gets half the bands. This catches directors of multiple companies out more than any other rule.

Rates and marginal relief in detail

The deadlines

Pay Corporation Tax: 9 months and 1 day after the accounting period ends
File the CT600: 12 months after the accounting period ends
First year: usually two returns, because a first accounting period runs slightly over 12 months

Corporation Tax deadlines explained

What goes in the Company Tax Return

A complete CT600 submission includes the return itself, tax computations showing how taxable profit was worked out from accounting profit, and the statutory accounts — all filed online in iXBRL. The computation is where tax is won or lost: adding back disallowable costs, claiming capital allowances, applying reliefs and losses.

Our Corporation Tax return service

Reducing the bill: expenses, allowances, pensions

Allowable expenses — every cost incurred wholly and exclusively for the trade reduces taxable profit
Capital allowances — usually 100% relief on equipment via the Annual Investment Allowance or full expensing
Employer pension contributions — deductible, no NI, often the most efficient extraction of profit
Losses — carried forward (or sometimes back) to reduce tax in other years

Allowable expenses

Capital allowances

How to pay

Pay electronically using your 17-character Corporation Tax payment reference — note it changes every period, so last year’s reference misallocates the money. HMRC doesn’t accept personal credit cards. If you can’t pay in full, contact HMRC about a Time to Pay arrangement before the deadline.

Let us handle the whole cycle

We prepare accounts, build the computation, file the CT600 and confirm your exact bill and payment date — a fixed £399 + VAT for micro-entity companies. Call 0114 327 1480.

See our fixed fees

The complete guide to Corporation Tax