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What is Corporation Tax?

Corporation Tax is a tax paid on profits made by limited companies.

It is paid directly to HMRC. Corporation Tax may also apply to certain clubs, associations, charities and other organisations.

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Who needs to pay Corporation Tax?

Every company based in the UK must pay Corporation Tax on all their profits, including profits made overseas. Companies based outside the UK only pay Corporation Tax on income received in the UK.

It is the company that is legally required to pay Corporation Tax. In practice this means that the owner or director of the company must ensure that it is paid.

How much Corporation Tax do I need to pay?

The rate of Corporation Tax payable on taxable income varies according to the amount of profit a company makes.

In 2012 a company recording less than £300,000 taxable profit will be taxed at 20%, profits over £1,500,000 are taxed at 25%. There is a sliding scale for profits in between.

Companies in certain industries, such as oil extraction, may have ‘ring-fenced profits’, which are taxed at different rates.

How do I pay Corporation Tax?

If your company is liable for Corporation Tax, or you think it might be, you should inform HMRC.

They will ask you to file a company tax return, although you usually do not need to file the return until after the Corporation Tax is paid.

  • You can submit your company’s tax return online, and pay the tax you owe electronically.

  • Corporation tax is usually due within nine months and one day of the end of the tax year. Larger companies may pay tax quarterly over an extended period.

For further Tax information, please follow the links below:

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    CIS For Subcontractors
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    What are the different types of National Insurance?
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  • Pension Tax includes:
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  • Inheritance Tax includes:
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  • Capital Gains Tax includes:
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More Info

Tax Refunds

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