Corporation Tax is the tax payable to the HMRC, as a percentage of the taxable profits of your limited company.
1: Rates
Up to 31 Mar 2023 the main rate of corporation tax is 19%.
From 01 April 2023 a new band of Corporation tax is introduced. From April onwards the corporation tax rate for businesses with annual profits below £50,000 remains the same at 19%. For businesses with annual profits in excess of £250,000 the corporation tax rate on those profits will be 25%. And finally for businesses where profits fall between these two numbers the corporation tax rate is calculated on a sliding scale between 19% and 25%.
Our blog article Corporation tax rates in 2023 covers this in more detail.
2: How Corporation Tax is calculated
Corporation Tax is a tax on the taxable profits of your limited company. Taxable profits for Corporation Tax include:
- taxable income such as trading profits and investment profits (except dividend income which is taxed differently);
- capital gains – known as ‘chargeable gains’ for Corporation Tax purposes;
- less any claimable company expenses
If your company or organisation is based in the UK, you’ll have to pay Corporation Tax on all your taxable profits – wherever in the world those profits come from.
3: When to Pay
Corporation Tax is payable nine months after your company year end. Only one payment of Corporation Tax is due each year (except possibly in your first year of trading, when your first period may be longer than 365 days).
Remember, your company year end will often NOT be the same as the personal tax year end. You can view your company year end on your Company Information page within your No Worries online account.