Corporation Tax
UK tax glossary · Last reviewed: April 2026
Corporation Tax (CT) applies to UK limited companies' trading profits, investment income, and chargeable gains. The main rate is 25% for companies with profits over £250,000 in 2026/27. A small profits rate of 19% applies on profits up to £50,000, with marginal relief between the two thresholds.
Companies must file a CT600 return and pay any CT due nine months and one day after the accounting period ends. Large companies (profits over £1.5 million) pay in quarterly instalments.
CT is separate from the Income Tax and NI paid by directors on their salaries, or dividend tax on distributions. Many small company owners blend salary and dividends to minimise the overall tax burden across CT, Income Tax, and NI.
Worked example
Company profit: £80,000. Marginal relief applies between £50,000 and £250,000. Effective CT rate: approximately 21.5%. CT due: ~£17,200. File CT600 and pay 9 months after year-end.
Common questions
When do I need to pay Corporation Tax?
Payment is due nine months and one day after the end of your accounting period. For a 31 March year-end, that is 1 January the following year. The CT600 return is due 12 months after the period ends.
Can I reduce Corporation Tax with pension contributions?
Yes. Employer pension contributions are a deductible business expense and reduce taxable profits subject to CT. This is one of the most tax-efficient benefits available to company directors.
Related resources
TaxHelper provides general information based on published HMRC rates and guidance. It is not regulated financial or tax advice. For decisions involving significant sums, complex circumstances, or if you are unsure, speak to a qualified accountant or HMRC directly.