Corporation Tax for limited company directors – rates, deadlines and how to account for it

Corporation Tax is charged on the profits of all UK-based companies, including limited companies and foreign companies with offices or branches in the UK.

It is also levied on organisations such as co-operatives, clubs, and unincorporated associations, such as sports clubs.

Corporation Tax (CT) is charged on your limited company’s profits. In practice, that’s any money made from the day-to-day activities of doing business (known as “trading profits”), as well as any investments owned by your business.

The tax is also levied on any assets sold for more than their cost, known as “chargeable gains”.

How does it apply to limited companies?

Corporation Tax rates increased from April 2023 and remain in place for the 2026/27 tax year.

Annual Profits	April 2023 onwards	2022/23
Up to £50,000	19%	19%
£50,001 – £250,000	Marginal relief applies	19%
Over £250,000	25%	19%

The current 19% small profits rate applies to companies with profits of £50,000 or less.

The main 25% rate applies to profits over £250,000. Between these thresholds, a marginal relief system applies, resulting in an effective Corporation Tax rate that gradually increases from 19% to 25%. The marginal rate on additional profits within this band is typically 26.5%.

These profit limits are divided by the number of associated companies. For example, if you run two limited companies under common control, each company’s thresholds are halved to £25,000 and £125,000.

This can significantly affect the amount of Corporation Tax you pay if you operate more than one company.

Use our associated companies / marginal relief calculator.

For more information and the official marginal relief calculator, see HMRC’s marginal relief guidance.

Example: A limited company with £85,000 profit and no associated companies will pay Corporation Tax at an effective rate of just over 22%. If the same company invests £10,000 in new equipment qualifying for full expensing, the tax bill will fall by around £2,650.

If you don’t have any associated companies, work out your tax liability via our limited company profits calculator (2026/27).

How do you register to pay CT?

You have to register your company to pay Corporation Tax within 3 months of starting any business.

“Starting to do business” can include a wide range of activities, such as advertising, buying and selling goods or services, or renting property.

It’s a good idea to take action as soon as you can, as you could face a fine or penalty if you don’t register your new company for Corporation Tax in time.

Registration is completed online via GOV.UK – see Register your company for Corporation Tax.

HMRC will send your company its Unique Taxpayer Reference (UTR) to your company’s registered address after incorporation.

You will need your company’s UTR, registration number (on your Companies House paperwork), the date you started trading, and the date your annual accounts are made up.

The vast majority of limited companies hire accountants to take care of this type of paperwork.

Unless you have some kind of accountancy training, we would advise you to use an accountant to help you set up your tax affairs.

They will be able to register your company for all other key taxes, including VAT and payroll taxes.

When is it due?

The CT600 Corporation Tax Return (which outlines how much profit your company has made during the financial year) must be filed within 12 months of your limited company’s accounting period.

However, any tax owed must be paid earlier – within nine months and one day of the end of your accounting period. Interest is charged on late payments, and penalties apply if your return is late.

If your profits are above £1.5m (less if you have associated companies), you’ll be required to pay your CT bill in instalments. For details, see HMRC’s guidance on associated companies.

You can pay your Corporation Tax in several ways, including telephone or online banking, Bacs, CHAPS, or Direct Debit. You can also pay online using a debit or corporate credit card on GOV.UK.

Reducing your Corporation Tax bill

Several legitimate methods can reduce your company’s taxable profits:

• Full expensing and capital allowances – claim relief on qualifying plant and machinery purchases. See our concise guide, and also the official GOV.UK capital allowances guidance.
• Pension contributions – qualifying employer pension contributions can usually be deducted where they meet the normal wholly and exclusively test.
• Carry forward or back trading losses to offset against profits in other periods.
• Charitable donations made through the company can reduce taxable profit.

Record keeping

Companies must maintain full accounting records that show income, expenses, assets, and liabilities. These must generally be kept for at least six years from the end of the accounting period.

Using digital accounting software can make it easier to maintain your records and prepare your accounts and Corporation Tax Return.

Worked example

A consultancy limited company earns £85,000 profit for the year ending 31 March 2026. It has no associated companies.

• Profits up to £50,000 taxed at 19% = £9,500
• Remaining £35,000 taxed at an effective marginal rate of 26.5% = £9,275
• Total Corporation Tax = £18,775
• Effective tax rate = 22.1%

If the same company bought £10,000 of computer equipment qualifying for full expensing, taxable profits would fall to £75,000, saving around £2,650 in Corporation Tax.

Further information

For full details and calculators, see:

• GOV.UK: Corporation Tax overview
• GOV.UK: Marginal Relief guidance
• GOV.UK: Deadlines and payment guidance
• Choosing a limited company accountant