Corporation Tax - FAQs

What is Corporation Tax?

Corporation Tax is a tax levied on Limited Company profits based on a set accounting period.

It does not apply to sole traders, partnerships or individuals.

How much Corporation Tax will my limited company pay?

Corporation Tax is paid by Limited Companies. The amount the company pays will depend on how much profit the company has made for the purposes of the corporation tax return (this may differ from the profit as per the limited company accounts).

Currently, company profits of less than £50,000 per year are taxed at 19%. Profits of more than £250,000 are taxed at 25%. Profits of between £50,000 and £250,000 are eligible for marginal relief.

When do Corporation Tax payments need to be made?

Corporation Tax is due within nine months of the end of the accounting period. For example, if the accounting period ends on 31st March, corporation tax payments would be due by 31st December.

How often does a limited company need to file Corporation Tax Returns?

Corporation Tax Returns can cover a maximum period of twelve months. Usually a company will submit two corporation tax returns in its first year of trading as the first set of accounts are often longer than twelve months to take the year end to the end of the relevant month (e.g. 15th March 2022 to 31st March 2023).

From year two onwards, companies typically submit one corporation tax return per year together with the annual limited company accounts.

How can the amount of Corporation Tax payable be reduced?

Corporation Tax payable is based on profits so it is important that the company claims all of the expenses it is entitled to. Expenses reduce the profit and therefore corporation tax liability.

Companies can also claim capital allowances on qualifying fixed assets and use this to reduce corporation tax liability.

Finally, if the company makes a loss this can be carried forward to future accounting periods to offset corporation tax liabilities.

How do I make Corporation Tax payments?

You can make corporation tax payments online through your company business tax account.

Alternatively, payment can be made via bank transfer using the correct corporation tax return reference number. You will be assigned a reference number by HMRC for each tax return. You can find this reference number on the "notice to deliver a company tax return" letter sent out by HMRC or from your accountant.