Corporation Tax Explained
Corporation Tax is a tax that limited companies in the UK must pay on the profits they make. This includes profits from trading (selling goods or services), investments, and any money made from selling assets such as property, land, or shares.
Unlike Income Tax, which individuals pay through PAYE or self-assessment, Corporation Tax is paid by the company itself. It is not taken off automatically – your company is responsible for working out how much tax it owes, reporting it to HMRC, and paying it on time.
The current rate of Corporation Tax can vary depending on the size of your profits. In general, most companies pay a main rate of 25%, although there may be lower rates for smaller profits or reliefs that reduce your tax bill.
Corporation Tax Made Easy
What Are the Legal Requirements?
If you run a limited company, you have legal responsibilities when it comes to Corporation Tax. These include:
Registering for Corporation Tax when you start trading (usually within three months of starting business activity).
Keeping proper accounting records that show how much your company earns and spends.
Filing a Company Tax Return each year, using the correct form (CT600).
Paying your Corporation Tax by the deadline – usually nine months and one day after the end of your company’s financial year.
Submitting your accounts to Companies House annually.
Even if your company makes no profit or owes no tax, you still have to submit a return and tell HMRC.
If you miss deadlines or make mistakes, HMRC may charge you penalties and interest, so it’s important to stay on top of your responsibilities.
What You Need to Do
Here are the main steps you need to take to stay compliant with Corporation Tax:
Register with HMRC – Once your company starts trading (even if it’s only a small sale), you must let HMRC know so they can expect your tax return.
Keep good records – You must track all income, expenses, and company spending. This includes invoices, receipts, and bank statements.
Prepare your annual accounts – These show your company’s financial position at the end of each financial year.
Work out how much profit you’ve made – From this, you calculate how much Corporation Tax you owe.
File your Company Tax Return – This includes the CT600 form and any supporting documents.
Pay the tax you owe – Usually within nine months and one day after your accounting year ends.
Use accounting software – If you're a small company, you might also need to meet Making Tax Digital (MTD) rules, depending on your size and income.
How We Can Help You
We’re here to make sure your company meets all its legal duties and pays the correct amount of tax – not a penny more. Our team of friendly, experienced accountants can help with:
Registering your business for Corporation Tax
Keeping accurate financial records and using modern software
Preparing your annual accounts and Company Tax Return (CT600)
Calculating how much tax you owe and helping you pay it on time
Finding tax reliefs or allowances to lower your bill if possible
Communicating with HMRC on your behalf if needed
Whether you're just starting out or already running a growing business, we’ll make the process simple and stress-free.
Let us handle the numbers, deadlines, and paperwork – so you can focus on running your business. Contact us today to find out how we can support you with Corporation Tax and more.