Corporation Tax is the tax a UK limited company, and some other organisations such as clubs and societies, pays on its taxable profits. The main rate is 25%, with a 19% small profits rate for profits of £50,000 or less.
Who pays it
Corporation Tax is charged on the profits of UK limited companies, foreign companies with a UK branch or office, and other bodies such as clubs, co-operatives and unincorporated associations. Taxable profits include trading profits, income from investments and property, and chargeable gains on selling assets.
The rates
| Taxable profits | Rate |
|---|---|
| £50,000 or less | 19% (small profits rate) |
| £50,000 to £250,000 | 25%, reduced by marginal relief |
| More than £250,000 | 25% (main rate) |
The £50,000 and £250,000 limits are shared with any associated companies and are reduced for an accounting period shorter than 12 months.
Paying and filing
HMRC does not send a bill. The company works out its own tax, pays it 9 months and 1 day after the end of the accounting period, and files a CT600 within 12 months of the end of the period. Companies with profits over £1.5 million pay earlier, in instalments.
Read more: Getting started with Corporation Tax and Paying your Corporation Tax.