If you run a limited company in the UK, you’ll need to pay corporation tax on your profits. Here’s a clear, jargon-free explanation of what it is, how much you’ll pay and when it’s due.
What Is Corporation Tax?
Corporation tax is a tax on the taxable profits of UK limited companies. The tax is calculated on your company’s annual profit — after allowable expenses, salaries, pension contributions and other deductions — and must be paid to HMRC.
💡 Key takeaway
From April 2023, corporation tax rose to 25% for profits over £250,000 — companies between £50k–£250k pay a marginal rate using relief.
Corporation Tax Rates for 2026
The main corporation tax rate is 25% for companies with profits over £250,000. The small profits rate of 19% applies to companies with profits under £50,000. Marginal relief applies between £50,000 and £250,000, giving an effective rate that tapers between 19% and 25%.
📉 Small Profits Rate
- 19% on profits up to £50,000
- Same rate as pre-2023
- Simple calculation
- No marginal relief needed
- Applies to most micro-businesses
📈 Main Rate
- 25% on profits over £250,000
- Marginal relief for £50k–£250k
- More complex tax calculation
- Consider profit extraction planning
- Talk to an accountant
When Is Corporation Tax Due?
Corporation tax is due 9 months and 1 day after the end of your accounting period. Your CT600 return must be filed with HMRC within 12 months of the end of your accounting period. Many small companies’ accounting periods follow the financial year to 31 March.
Allowable Deductions
You can deduct salaries, employer pension contributions, rent, equipment (via capital allowances), professional fees, software, marketing and other genuine business expenses before calculating your tax liability. Getting deductions right significantly reduces your bill.
Accounting for Corporation Tax
Your bookkeeper maintains records throughout the year. Your accountant or bookkeeper then prepares your year-end accounts and CT600. Filing and paying on time avoids penalties and interest charges.
Frequently Asked Questions
When do I pay corporation tax?
9 months and 1 day after the end of your accounting period. For a year ending 31 March 2026, payment is due 1 January 2027.
What is the corporation tax rate for small companies?
19% for profits under £50,000. 25% for profits over £250,000. Marginal relief applies between these thresholds.
Can I reduce corporation tax legally?
Yes — through allowable expenses, pension contributions, capital allowances and R&D tax credits where applicable. A bookkeeper ensures all deductions are captured.
