Corporation Tax is the tax your limited company pays on its profits. It is completely separate from personal income tax and is paid directly to HMRC, not Companies House.
Current Rates
- Small profits rate: 19% — profits up to £50,000
- Main rate: 25% — profits over £250,000
- Marginal relief — profits between £50,000 and £250,000
Use the CalcPad Corporation Tax calculator to work out your exact liability.
Key Deadlines
- Pay Corporation Tax: 9 months and 1 day after the end of your accounting period
- File CT600 return: 12 months after accounting period end
- Register: within 3 months of starting to trade
Payment is due before the return. Many new directors get caught out by this.
Allowable Expenses
Reduce taxable profit by deducting legitimate business expenses: office rent, employee salaries, business travel, professional fees, marketing costs, software subscriptions, equipment and business insurance. Expenses must be "wholly and exclusively" for business purposes.
How to File
Corporation Tax returns (CT600) are filed online with HMRC. You need your company UTR, computed accounts in iXBRL format and the CT600 form. Most companies use an accountant or tax software.
Salary vs Dividends
Most small company directors pay themselves a salary up to the NIC threshold (£12,570) and take the rest as dividends, which are taxed more favourably. See our sole trader vs limited company guide for the full comparison.
Penalties
HMRC charges interest on late payments from day one. Late CT600 filing starts at £100, escalating to £200 after 3 months, then 10% of unpaid tax after 6 and 12 months. File on time and pay on time — there are no grace periods.