Every limited company in the UK must deal with Corporation Tax. It is not just about paying tax on your profits—it also involves registration, record keeping, calculation, filing, and payment, all to a specific timeline. For new business owners, the process can seem confusing, especially when guidance from HMRC is full of terms like accounting periods, chargeable profits, and filing windows. In this blog, we break it down clearly. We explain when to register, how Corporation Tax is calculated, what needs to be submitted, and when the deadlines fall. If your business is already active or about to start trading, this is essential reading.
Corporation Tax is the tax that UK limited companies pay on their profits. This includes trading income, investment income, and capital gains. Unlike individuals, companies do not receive a personal allowance, which means all taxable profits are subject to Corporation Tax from the first pound. The current main rate is 25 percent, though companies with profits below £50,000 may qualify for a reduced rate through the marginal relief system. Whether you are a small consultancy or a growing firm with staff and assets, Corporation Tax is a standard part of doing business.
You must register for Corporation Tax within three months of starting to trade. HMRC defines trading as carrying on any business activity, not just selling goods or issuing invoices. This could include buying stock, advertising, taking orders, or entering into contracts. If you wait until money hits the account, you may already be late. Registration is done online through your Government Gateway account. You will need your company’s unique tax reference number (UTR), which is sent to your registered office shortly after incorporation. If you do not receive it, you must request one. Delaying registration does not delay your obligations. Penalties can still apply if deadlines are missed.
Once you are registered, HMRC will expect you to file a Corporation Tax return every year. You will be asked to provide your company’s accounting period, which usually matches your financial year unless you tell HMRC otherwise. The accounting period determines when your return and payment are due. You will also need to keep proper records, calculate your tax, and submit your return electronically using approved software. HMRC will not calculate it for you. That is your responsibility as a company director.
Corporation Tax is calculated on the company’s taxable profits. This starts with your accounting profit, adjusted for allowable expenses, depreciation, and other tax adjustments. You then apply the correct tax rate. As of now:
Companies with profits up to £50,000 are taxed at 19 percent
Companies with profits over £250,000 are taxed at 25 percent
Companies between these thresholds are taxed using marginal relief
This tiered structure means many small businesses will still pay 19 percent, but as profits grow, the rate gradually increases. It is important to apply the correct rules for associated companies—if your business owns or is connected to other businesses, these thresholds may be split across them. Mistakes here can lead to underpaid tax or future enquiries.
Taxable profits include your trading profits (income minus allowable business expenses), investment income (like interest), and capital gains (such as selling a business asset at a profit). Not all expenses are tax deductible. Entertainment, certain legal fees, and personal expenses may need to be added back. Capital allowances may apply to equipment or vehicles, reducing your tax bill. Timing matters as well. Income is recorded when earned, not when paid. The same applies to expenses. AFG helps clients prepare accurate tax computations that reflect the true position and ensure compliance.
Corporation Tax has two key deadlines:
Payment: The tax must be paid within nine months and one day of the end of your accounting period. So, if your year-end is 31 March, the tax is due by 1 January the following year.
Filing: The tax return (CT600) must be submitted within twelve months of the accounting period end.
Note that payment comes before filing. This can catch some businesses out. You are expected to know and pay the correct amount before submitting the return. Late payment leads to interest charges. Late filing results in automatic penalties. These start at £100 and increase the longer you delay. Repeated offences attract heavier fines.
Your Corporation Tax return includes several components:
The CT600 form itself
Your company accounts in iXBRL format
A tax computation that shows how you calculated your taxable profits
Supporting documents such as capital allowances claims or group relief
Everything must be submitted electronically through HMRC’s system or recognised commercial software. Paper submissions are no longer accepted. The return must be accurate, supported by your records, and reflect the same year-end as your accounts.
At Allied Financial Group, we manage every aspect of Corporation Tax compliance. We register new companies, monitor accounting periods, prepare accurate tax computations, and ensure returns are submitted correctly and on time. We use recognised software to submit digital filings and ensure your records are maintained in line with HMRC expectations. For growing businesses, we advise on marginal relief, group structures, and advance planning to manage liabilities. We also represent clients in the event of an HMRC enquiry, handling all correspondence and negotiation. Whether you are filing your first return or managing multiple companies, we provide clarity and confidence throughout the process.
Corporation Tax is not just about compliance—it is about planning. By reviewing your profits throughout the year, you can manage cash flow and reduce surprises. We help clients forecast tax, plan dividend strategy, and invest in ways that make sense both commercially and from a tax perspective. For example, we may identify that bringing forward a purchase or making pension contributions could reduce your liability. We also advise on director salaries versus dividends, capital expenditure, and claiming R&D relief where eligible.
Even if your company is not currently trading, you may still need to file with HMRC. A dormant company that has previously traded must notify HMRC of its status and may need to file a nil return. Ignoring the obligation entirely can result in penalties. AFG manages dormant company filings to ensure your business stays in good standing until you are ready to trade again.
The most common Corporation Tax mistakes include:
Missing the registration deadline after starting to trade
Filing late or using the wrong accounting period
Failing to keep adequate records
Claiming non-allowable expenses
Forgetting to apply for marginal relief
Paying late or estimating the wrong amount
Each of these can be avoided with proper support. At AFG, we work with business owners to remove the guesswork and avoid the rush. We prepare ahead, explain the figures clearly, and take care of the submission from start to finish.
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