Corporation tax

Corporation tax is the tax on taxable profits of limited companies and other organisations including clubs, societies, associations and other unincorporated bodies.

Taxable profits for corporation tax include profits from taxable income such as trading and investment profits (excluding dividends) and capital gains.

If your company or organisation is based in the UK then you will have to pay corporation tax on all of your taxable profits no matter where in the world the profits come from.

The tax year for corporation tax purposes follows 1st April to 31st March rather than your financial year.

If your accounting period doesn't match the corporation tax financial year and spans two years then you will need to apportion your company's taxable profits between the two years on a pro rata basis.

There are 2 rates of corporation tax depending on your taxable profits:

• The lower rate (small profits)
• The upper rate (main). 

There is also a sliding scale between these rates called marginal relief. If your profits fall between certain limits you will pay the main rate but they will be reduced by marginal relief.

If your organisation or company is subject to corporation tax requirements then you will need to tell HMRC you are liable for corporation tax, pay the right amount due on time and electronically and file a company tax return. The deadlines are different for each of the above requirements, if you don’t meet them you may be charged interest and/or penalties.

Unlike income tax or VAT, the deadline to pay your corporation tax is before the deadline to file your company tax return. You must pay by 9 months and one day after the end of your corporation tax accounting period and file your company tax return by 12 months after the end of the accounting period.

Corporation tax calculations.

Corporation tax on submissions.