A guide to UK corporation tax for small businesses
Confused about corporation tax? Unsure about the current rate, how to register and the corporation tax deadline? Let us walk you through it all.
What’s corporation tax?
Corporation tax is a tax that limited companies in the UK have to pay on their profits. It’s paid on the money a company makes from doing business. (Heads up, it’s just for companies, so if you’re a sole trader or in a partnership, you don’t have to worry about it.)
As soon as companies start operating or receiving an income, they must submit a tax return to HMRC once a year.
Corporation tax is charged on taxable profits; there’s no tax-free allowances for companies, so a company with any amount of taxable profit has to pay. Taxable profit is calculated by taking a company’s profit before tax (its total income minus total expenses) and making a number of tax adjustments. For example, expenses like client dinners must be ‘added back’ to the calculation.
There are also allowances and reliefs you can claim to reduce your bill. For example, you can get money back on the things the business buys like tools, machinery and company cars.
For accounting purposes, you might spread the cost of some assets, such as tools and machinery across their useful life - this is called ‘depreciation’. You normally have to add back any depreciation in your accounts, instead you can claim capital allowances.
How to register for corporation tax
Once you start a limited company, it must register for corporation tax within three months of beginning business activities – this can include ‘setting up shop’ with a trade or opening an interest-bearing bank account.
The government website has information on how to set up a limited company.
When your company registers with HMRC, you’ll need to provide some information including:
The date the company started its business activities (which will be used as the start date of the company’s first accounting period)
The company name
The company registration number (provided by Companies House when you incorporate a company)
The company’s main address
The type of business
The company’s accounting date (when it makes its accounts up to)
The name and home address of the company’s directors
Corporation tax rates for 2025
Companies with taxable profits above £250,000 will pay corporation tax at the main rate of 25%. Those with taxable profits below £50,000 will pay corporation tax at 19%. Companies whose taxable profits fall between £50,000 and £250,000 will be able to claim marginal relief, meaning their profits will be taxed at a rate between 19% and 25%.
Not sure where you stand? You can use the government’s Marginal Relief Calculator to work out how much you may be able to claim and what the company’s effective corporate tax rate will be.
When is corporation tax due?
Your company’s corporation tax deadline (and the filing of company accounts) will depend on its accounting period. An accounting period is the period of time the accounts cover, which is usually 12 months.
Corporation tax is due before the deadline to file your company’s tax return, so you should prepare your return first so you know how much your company owes.
Some important deadlines to underline with a big red pen:
Accounts for limited companies are due to Companies House nine months after the end of your accounting period
Corporation tax payments are due nine months and one day after the end of the corporation tax accounting period for your previous financial year
The corporation tax return deadline is 12 months after the company’s accounting period
Just bear in mind, these deadlines will be different if your company prepares its accounts for a period longer than 12 months. And businesses with more than £1.5 million in profits need to pay corporation tax in instalments, so the process is different.
If your company’s making a loss and doesn’t owe corporation tax, you’ll still need to declare this to HMRC. You can usually offset tax losses from one year against future profits.
How to file a corporation tax return
Once you’ve worked out how much your company owes and when it’s due, you’ll need to fill in your company tax return online, known as form CT600. Your accounts need to be filed to both HMRC and Companies House.
The company tax return must include the following information: company name, company registration number, registered office, tax reference number, turnover and profit for the period being reported, tax calculation, details of allowances and reliefs.
How to pay corporation tax
There are a few different ways to pay corporation tax. These include online and telephone banking, CHAPS, Bacs and Direct Debit (you can’t use a personal credit card).
Whichever way you choose, you need to pay it before the deadline to avoid incurring late payment interest. If your payment deadline falls over the weekend or on a bank holiday, the money must reach HMRC on the last working day before.
To make a same-day payment, use CHAPS or online banking (Faster Payments).
Payments that take three working days include Bacs, Direct Debit (if you’ve already set one up), online payment by debit or corporate credit card and payments made from your bank or building society.
Just bear in mind, a Direct Debit will take five working days to be processed if it’s just been set up.
This article is for information purposes only and does not constitute legal, tax or accounting advice. You should get professional advice if you need help to understand your legal rights or to manage your accounting or tax affairs.
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