What is Corporation tax?

Corporation tax is a tax charged on company’s taxable profits. Companies in the UK are liable to corporation tax for each chargeable accounting period which is usually the period for which the company makes up a set of accounts.

Corporation tax rates on Companies starting 1 April

Main rate (all profits except ring fence profits)19%20%
Special rate for unit trusts and open-ended investment companies20%20%

How the corporation tax is calculated?

Corporation tax is calculated based on rates of tax set by Parliament for each financial years which runs from 1 April. The current financial year is 1 April 2017 to 31 March 2018, and the corporation tax rate applicable for financial year 2017 is 19%.
For example, if a company X makes taxable trading profit (TTP) of £250,000 during the financial year 2016. As the rate of corporation tax during the financial year 2016 was 20%, the company will be liable to pay £50,000 as corporation tax liability to HM Revenue and Customs (HMRC).

If the company X makes the same amount of profits in the financial year 2017, it will be required to pay £47,500 as corporation tax liability, being 19% of the TTP.

Due dates for Corporation tax liability

The deadline for making the corporation tax payment will depend on your taxable profits.

  • Taxable profits of up to £1.5 million
    You must pay your corporation tax 9 months and 1 day after the end of your accounting period.
  • Taxable profits of more than £1.5 million
    You must pay your corporation tax in instalments. The dates when you have to pay your instalment payments of Corporation Tax, and the number of payments, depend on the length of your accounting period.

    For accounting periods of 12 months, you will normally pay your Corporation Tax in 4 quarterly instalments, 2 of which are due before the end of your accounting period.

Your Responsibilities

Action RequiredDeadline
File first accounts with Companies House21 months after the date you register your company with Companies House
File annual accounts with Companies House9 months after your company’s financial year ends
Pay Corporation Tax (if any)9 months and 1 day after your accounting period ends
File a Company Tax Return (CT600)12 months after your accounting period for Corporation tax ends

How we can help you

At Martax, we can help you with the following:

  • Registration of your company for corporation tax purposes
  • Preparation of your company’s statutory accounts and Corporation Tax Return (CT600)
  • Submission of Statutory accounts with Companies House
  • Submission of your company’s Corporation Tax Return with HMRC
  • Advise on how and when to make your corporation tax payment (if any)

For more information and to arrange a free consultation, please contact us.