How much corporation tax will my company pay?
Short answer
Nineteen per cent on profits up to £50,000 and 25% above £250,000, with marginal relief tapering the effective rate in between. Payment is due nine months and one day after your accounting period ends; the CT600 return is a separate deadline twelve months after it.
Since April 2023 Corporation Tax has had a two-rate structure. Taxable profits of £50,000 or less are charged at the small profits rate of 19%. Profits above £250,000 pay the main rate of 25%. Between the two, marginal relief tapers the effective rate upwards, so there is no cliff edge.
One trap catches small groups: both thresholds are divided between associated companies. Two companies under common control halve the thresholds, so profits of £30,000 in each can be taxed at more than the small profits rate. Take advice before setting up a second company.
What is actually taxed
Corporation Tax is charged on taxable profit, which is your accounting profit adjusted for disallowable items and reliefs. Staff costs, rent, utilities, professional fees and ordinary running costs come off. Client entertaining, fines and accounting depreciation are added back. Against that:
- Capital allowances — the Annual Investment Allowance gives 100% relief on qualifying plant and machinery up to £1 million.
- R&D relief for companies investing in innovation.
- Trading losses, which can be carried back one year or forward indefinitely against future profits.
- Director's salary paid through PAYE, which is deductible. Dividends are not — they come out of after-tax profit.
Deadlines and what happens if you miss them
Register the company for Corporation Tax within three months of starting to trade. Then two separate obligations run on different clocks: payment is due nine months and one day after the accounting period ends (1 January for a 31 March year end), while the CT600 return and statutory accounts are due twelve months after it. Companies with profits above £1.5 million pay in quarterly instalments during the period itself.
Late filing costs £100 immediately, another £100 at three months, then 10% of unpaid tax at six months and a further 10% at twelve. Interest runs on late tax at the Bank of England base rate plus four percentage points. A return is required even if the company made a loss or was dormant for part of the year.
Keep the records behind the return for at least six years. HMRC can open an enquiry within twelve months of filing — longer where an error was careless or deliberate — and if you disagree with an assessment you can request a statutory review within 30 days and then appeal to the First-tier Tribunal.
Related guides
Corporation Tax Basics
Corporation Tax is charged on the taxable profits of limited companies and other incorporated entities in the UK. Unlike income tax, there is no automatic assessment — you must work out and pay what you owe and file a return each year.
5 min
Sole Trader vs Limited Company
Choosing the right business structure is one of the most important decisions you will make as a new business owner. Sole trader and limited company are the two most common options, each with distinct implications for tax, personal liability, and administrative burden.
8 min
Business Record Keeping
Keeping good business records is both a legal requirement and essential for running your business effectively. HMRC can inspect your records for up to six years — and poor records can result in tax investigations, penalties, and unnecessary stress.
5 min
VAT Registration and Thresholds
Value Added Tax (VAT) is a tax on the supply of most goods and services in the UK. Once your taxable turnover exceeds the registration threshold, registration is compulsory — but you can also register voluntarily before reaching it.
5 min
More business questions
- What happens if you miss the Companies House filing deadline?
- Do you need to register with the ICO?
- Is a cookie banner legally required on my website?
- Which pays less tax — a sole trader or a limited company?
- What happens if you employ someone without the right to work?
- How long do you need to keep business records?
Disclaimer