Corporation Tax in the UK: A Simple Guide for Founders

Running a business in the UK? Then Corporation Tax is something you can’t ignore. It’s not glamorous, but getting it right keeps HMRC happy — and mistakes can cost you.

Here’s what every founder needs to know.

What Is Corporation Tax?

Corporation Tax is the tax your company pays on its profits. If you’re running a limited company, you’ll pay it on things like:

• Trading profits (what’s left after expenses).

• Investment income.

• Selling assets like property or equipment.

Unlike income tax, there’s no personal allowance. From your very first pound of profit, Corporation Tax is due.

Current Rates

Since April 2023, rates are based on your profit levels:

• Small companies (profits up to £50,000): 19%

• Profits over £250,000: 25%

• Between these amounts: a tapered rate applies

Deadlines

• File your Company Tax Return (CT600) within 12 months of the end of your accounting period.

• Pay the Corporation Tax bill within 9 months and 1 day of year-end.

Miss either deadline and HMRC adds interest or penalties.

What Counts as Deductible?

You only pay Corporation Tax on profits. That means you can deduct legitimate business expenses before calculating what you owe. Think salaries, rent, software, marketing, and professional fees. Just make sure they’re wholly and exclusively for business.

Key Takeaway

Stay on top of deadlines, know your rate, and keep clean records. Corporation Tax is straightforward if you plan ahead.