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The UK Corporation Tax: Everything You Need to Know

Updated: Dec 29, 2023

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Understanding corporation tax in the United Kingdom can be complex since it is not only complicated but also unique to each organization. This article will provide an in-depth explanation of corporation tax in the United Kingdom, including what it is, how much it costs, and how it will influence your firm.

What Is a Corporation Tax?

Corporation tax is a levy levied on income from limited corporations and other legal organizations in the United Kingdom. Corporation tax is used by the government to produce income for public spending, hence it is an essential component of the country's tax structure.

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What is the Corporation Tax in the United Kingdom?

Since 1st April 2017, the corporation tax rate in the UK has been set at 19%, which means that any company with profits less than £300,000 will be taxed at 19%, while any firm with profits greater than £300,000 will be taxed at 20%.

However, beginning in April 2023, corporate tax will be levied at 25% on income up to £250,000 and 19% on profits less than £50,000. These rates were set by the government to encourage businesses to invest and thrive.

If your firm's profits fall between the upper and lower thresholds, you must pay the marginal rate of 26.5%. (with the marginal relief benefits).

Who Must File for Corporation Tax in the United Kingdom?

If your company is based in the United Kingdom, you must file an annual corporation tax return. This return must be filed electronically with HM Revenue & Customs (HMRC).

You do not need to submit a corporation tax return if you are a sole proprietor or partner in a partnership because your firm is not regarded as a separate legal entity from you. However, your business profits may still be subject to income tax and National Insurance.

Other organizations, in addition to UK limited businesses, pay corporation tax. Membership organizations, housing associations, cooperatives, clubs, and societies are examples of this.

If your company is profitable, you must pay the applicable corporation tax. You can only benefit from this tax break if you make profits rather than losses. Each year, you may be eligible for cash refunds and tax credits; but, you will only be eligible if you produced profits that year. You must also pay any taxes owed on dividends paid to shareholders during the fiscal year.

When Do You Need to File for Corporation Tax in the UK

You cannot receive tax relief if you do not file for company tax. Furthermore, if your company does not generate enough revenue to pay corporation tax, you may be required to pay additional HMRC income tax.

For example, if your fiscal year ends on December 31, you must pay company tax nine months and one day after the end of the fiscal year, on October 1.

Filing a corporate tax return can be complicated, so seek professional assistance if you have any questions. PKPI can assist you in ensuring that you are in compliance with the law and that you are paying the necessary corporate tax liability.


Corporation tax is an important aspect of the UK tax system, and businesses must understand how it works. Finding accountants in the UK has never been simpler. We at PKPI realize how difficult it is to run a business. This is why we provide accounting services to help relieve some of your load. Accounting help, tax counseling, and consultant services are among the many services we provide. Allow us to assist you in keeping your business functioning smoothly. To get started, contact us today!

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