Corporation Tax UK

Overview

Calculate Corporation Tax UK using the official rates and regulations for United Kingdom.

How it works

Enter the base amount and the calculator will apply the relevant rates and brackets to compute the result.

Corporation Tax Rates and Thresholds in the UK

UK corporation tax applies to the profits of limited companies and foreign companies with UK permanent establishments. Since April 2023, the main rate of corporation tax is 25% for companies with profits exceeding £250,000. A small profits rate of 19% applies to companies with profits up to £50,000, with marginal relief providing a sliding scale between the two rates for profits between £50,000 and £250,000. The marginal relief calculation ensures that the effective rate increases gradually rather than jumping from 19% to 25% at a single threshold. Companies in associated groups must divide the thresholds between them, potentially pushing otherwise small companies into the higher rate. For a company with £150,000 in profits, the effective rate after marginal relief would be approximately 22.5%, compared to 19% for a £50,000 profit company and 25% for one exceeding £250,000. Understanding these thresholds is crucial for tax planning, as decisions about profit extraction, reinvestment, and accounting periods can significantly affect the effective rate applied to your company's earnings.

Allowable Deductions and Capital Allowances

Corporation tax is calculated on adjusted profits after deducting allowable business expenses. Legitimate deductions include staff salaries, employer's National Insurance contributions, pension contributions, office costs, travel and subsistence for business purposes, professional fees, and raw materials. Capital expenditure on equipment, machinery, and vehicles is relieved through capital allowances rather than as a direct deduction. The Annual Investment Allowance (AIA) provides 100% relief on qualifying expenditure up to £1 million per year, effectively allowing immediate full deduction of most plant and machinery purchases. The Full Expensing super-deduction, introduced as a permanent feature from April 2023, provides 100% first-year allowance on qualifying main rate assets and 50% on special rate assets, making the UK's capital allowance regime one of the most generous in the OECD. Research and development expenditure attracts enhanced relief through the R&D tax credit scheme, with small and medium-sized companies able to claim a payable credit worth up to 18.6% of qualifying R&D expenditure, providing a valuable cash flow boost for innovative businesses.

Filing Requirements and Payment Deadlines

Companies must file a corporation tax return (form CT600) with HMRC within 12 months of the end of their accounting period. Unlike personal tax, corporation tax must be paid nine months and one day after the accounting period ends, which is typically before the filing deadline. Late payment incurs interest at HMRC's official rate, currently 6.75% from April 2025, plus potential penalties for habitual late payment. Companies with profits exceeding £1.5 million must pay corporation tax in quarterly instalments, with payments due in months 7, 10, 13, and 16 of the accounting period, requiring careful cash flow management. The return must include full accounts, a tax computation showing adjustments from accounting profit to taxable profit, and supporting schedules for any claims such as capital allowances, loss relief, or R&D tax credits. Online filing is mandatory, and most companies use commercial software or an accountant to prepare and submit their returns. Keeping accurate records throughout the year, including all invoices, receipts, bank statements, and payroll records, is essential for ensuring the return is correct and can be supported in the event of an HMRC enquiry.

Loss Relief and Group Relief Strategies

Companies experiencing trading losses have several options for utilising those losses to reduce their corporation tax liability. Losses can be carried forward indefinitely against future profits from the same trade, providing relief when the company returns to profitability. Alternatively, losses can be carried back one year, or up to three years for losses arising in accounting periods ending between April 2020 and March 2022, generating immediate cash refunds of tax previously paid. For groups of companies, group relief allows losses in one company to be surrendered to another group member with profits, optimising the overall group tax position. Understanding the interaction between these loss relief options and the corporation tax rates is essential for effective tax planning, particularly for startup companies that typically incur losses in their early years before achieving profitability.