What is Corporation Tax?
Corporation Tax is a tax paid on the profits made by limited companies.
It is paid directly to HMRC. Corporation Tax also applies to non-British companies with a UK branch or office and certain clubs, associations, charities and other organisations.
On this page you will find information about:
Who needs to pay Corporation Tax?
Every limited company based in the UK must pay corporation tax on all their profits, including profits made overseas. You must register to pay corporation tax within the first three months of trading as a limited company.
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. Your company pays corporation tax on all taxable profits at a current rate of 19%.
Different financial years often have different corporation tax rates. For example, the 2016-17 tax year corporation tax rate was 20%. If your accounting period crosses two tax years, you simply work out how many days of your accounting period fall into each year and apply the respective rates.
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.
You register for corporation tax online with HMRC. You must already have your business’s unique taxpayer reference number (UTR) to start the registration process. HMRC sent this UTR number to you when Companies House approved your application to become incorporated.
The CT600 is what HMRC call your Company Tax Return for Corporation Tax. This must be sent with a full set of company accounts and all other extra calculations and/or supplementary pages. The process can get quite complicated and expert consultation is advisable.
HMRC have set up several different ways to pay your corporation tax bill. You need to bear in mind their administrative times in order to make sure that you don’t miss a deadline. The only way you can’t pay is by post.
Ways to pay
- New direct debit: 5 working days
- Existing direct debit: 3 working days
- Bacs transfer: 3 working days
- Online payment using debit or corporate credit card
- in person at the building society or bank: 3 working days
- Telephone or online banking: same or next day
- CHAPS: same or next day
You can submit your company’s tax return online, and pay the tax you owe electronically.
For further Tax information, please follow the links below:
Income Tax includes:
What is income tax?
How is Income Tax calculated?
How much income tax do I need to pay?
Income Tax Allowances
Income Tax Rates and Taxable Bands
How do I pay income tax?
Tax Codes includes:
Where do I find my Tax Code?
New Tax Codes
What does my tax code mean?
Different Tax Codes
More than one job
Emergency Tax Codes
Emergency Tax Codes includes:
What is an Emergency Tax Code?
What does an emergency Tax Code look like?
Why do I have a BR/ Emergency Tax Code?
Can I get a Tax Refund if I have paid Emergency Tax?
Construction Industry Scheme includes:
CIS For Subcontractors
CIS For Contractors (Employers)
VAT (Value Added Tax) includes:
What is VAT?
When do I pay VAT?
How much VAT do I need to pay?
Do I need to register for VAT?
How do I pay VAT?
Can I claim VAT back?
Self Assessment includes:
What is Self Assessment?
Do I need to complete a Self Assessment tax return?
How do I get a Self Assessment tax return form?
How do I register for Self Assessment?
Can I register for Self Assessment on behalf of a company or trust?
What is a Unique Tax Reference number (UTR)?
How do I get a Unique Tax Reference (UTR) number?
How do I complete my Self Assessment tax return online?
Can I complete my Self Assessment tax return on paper?
Self Assessment Tax return deadlines
What if I submit my tax return late?
What if I submit my tax return incorrectly?
How is my tax calculated?
Do I need to check my tax calculation?
National Insurance includes:
What is National Insurance?
What are the different types of National Insurance?
Who pays National Insurance?
What is National Insurance used for?
Do your National Insurance payments affect your Pension and Benefits?
How much National Insurance should I pay?
Pension Tax includes:
Do I have to pay tax on my pension?
Do I have to pay tax on my state pension?
Inheritance Tax includes:
What is Inheritance Tax?
Capital Gains Tax includes:
What is Capital Gains Tax?