Corporation Tax

What is Corporation Tax?

Corporation Tax is a tax payable on the taxable profits of a company or other incorporated organisation for an accounting period. An accounting period for Corporation Tax is usually the same as the period covered by the Company Tax Return, and it cannot normally be longer than 12 months. You can check your accounting period through your HMRC online business tax account.

If your company is UK resident for tax purposes, it is generally subject to Corporation Tax on its profits from the UK and overseas. If it is not UK resident but trades in the UK through a permanent establishment such as an office or branch, it is generally subject to UK Corporation Tax on the profits linked to those UK activities.

Corporation Tax rates

As of April 2023, the CT rates are as follow:  

If taxable profits are between £50,000 and £250,000, the company may be entitled to marginal relief, which gradually reduces the effective rate between the small profits rate and the main rate. These profit limits are reduced if there are associated companies.

HMRC provides guidance and a calculator to help determine whether marginal relief is available.

What counts as taxable profits?

Taxable profits for Corporation Tax can include profits from:

• Trading activities
• Investments
• Chargeable gains arising on the disposal of assets

Allowable business expenses, capital allowances and other reliefs may reduce the amount of profit subject to Corporation Tax.

Why planning matters

Corporation Tax planning is about understanding the company’s taxable profits and making use of available reliefs and allowances in a compliant and commercially sensible way. The right approach will depend on the size of the business, its profit levels, investment activity and wider plans.

How we can help

We can help you:

• Understand your Corporation Tax position
• Identify available reliefs and allowances
• Review profit extraction and business expenditure
• Plan ahead for Corporation Tax liabilities and payment deadlines