Originally published in September 2013. Updated October 2025 for accuracy and relevance.
Corporation Tax in UK
Understanding Corporation Tax in the UK is essential for every limited company, branch, or business operating within the United Kingdom. As the UK continues to strengthen its position as a global business hub, managing corporate tax efficiently ensures compliance and financial sustainability.
This guide explains how UK corporation tax works, who needs to pay it, and how businesses can optimise their tax position using available reliefs and allowances.
What Is Corporation Tax in the UK?
Corporation Tax in the UK is a government levy charged on the taxable profits of:
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Limited companies (Ltd)
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Public limited companies (PLCs)
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Foreign companies with UK branches or offices
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Certain non-profit organizations, clubs, and associations
Simply put, if your company makes a profit from trading, investments, or the sale of assets, you’ll likely need to pay corporation tax.
Who Pays Corporation Tax in the UK?
If your business is a UK-registered company or operates through a UK branch or permanent establishment, you are liable for Corporation Tax.
This applies to:
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UK companies earning domestic or international income
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Overseas companies with UK-based activities
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Startups and small businesses trading through a limited company structure
Failing to register or submit returns on time can lead to penalties and interest charges, so understanding your obligations early is key.
What Profits Are Taxed?
Corporation Tax applies to your company’s taxable profits, including:
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Trading profits (income minus allowable business expenses)
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Investment income (interest, dividends, and royalties)
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Capital gains (profits from selling company assets, property, or shares)
To reduce your taxable profits legally, you can deduct allowable expenses, claim capital allowances, and utilise eligible tax reliefs.
Current UK Corporation Tax Rates (2025)
The Corporation Tax rate in the UK varies depending on your company’s profit levels.
As of 2025, the main rate applies to most companies — though small companies may qualify for marginal reliefdepending on their annual profits.
You can always check the latest rates and thresholds on the official HMRC website to ensure accurate reporting.
How to Pay Corporation Tax in the UK
Paying Corporation Tax involves several key steps:
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Register with HMRC – When your business starts trading, register for Corporation Tax within three months.
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Prepare and File a Company Tax Return (CT600) – Submit your annual return detailing profits, expenses, and tax calculations.
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Pay the Corporation Tax – Your payment deadline is typically nine months and one day after the end of your accounting period.
Failure to file or pay on time can result in financial penalties and may impact your company’s compliance record.
Key Considerations for UK Companies
✅ Allowable Business Expenses
Businesses can reduce taxable profits by claiming allowable expenses, including salaries, rent, marketing, utilities, and office supplies.
🚀 Tax Reliefs and Incentives
The UK government offers several tax reliefs that can lower your corporate tax liability:
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R&D Tax Credits for innovation and technology projects
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Capital Allowances for purchasing business assets
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Patent Box Regime for companies earning from patented innovations
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Creative Industry Reliefs for film, gaming, and media companies
💡 Seek Professional Guidance
Corporate taxation can be complex — especially with changing UK legislation and international tax obligations. Consulting a qualified accountant or corporate tax advisor ensures full compliance, accurate filing, and optimal tax efficiency.
Why Understanding Corporation Tax Matters
Managing Corporation Tax in the UK isn’t just about compliance — it’s about optimizing business growth.
Proper tax planning allows companies to:
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Improve cash flow
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Reinvest in growth and innovation
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Maintain credibility with investors and regulators
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Avoid unnecessary penalties or HMRC investigations
🧠 A well-managed tax strategy is essential for building a sustainable, compliant, and profitable business in the UK.
Corporation Tax in UK
If you plan to register a company in the UK it can open doors to global business expansion—securely and efficiently.
Need help registering a UK Company?
Our experienced team at BRIS Group is ready to guide you through the entire process — from name reservation and documentation to successful incorporation.
Contact us at [email protected] for personalized assistance.
Learn more about Starting Company in the UK and other European Courtiers for Company registration :