Do I get a bill for Corporation Tax?

No. Your company works out its own tax and tells HMRC, no one sends you a bill. That's the part most first-time directors don't expect, and the part we handle for you.

What if my company made no profit?

If there's no profit, there's usually no Corporation Tax to pay. You may still need to file the yearly form to show that, and we help you do exactly that.

How much Corporation Tax will I pay?

Most small companies pay 19% of their profit, so £1,900 on a £10,000 profit. Bigger profits move toward 25%, with a sliding scale between £50,000 and £250,000.

When do I have to pay it?

Usually 9 months and 1 day after your company's tax year ends. The yearly form is due a bit later, within 12 months of the year ending. We track both dates for you.

Is Corporation Tax the same as the tax I pay on my own salary?

No. Corporation Tax is on the company's profit. The tax on your salary or dividends is your own personal tax, separate and with its own rules.

Is it the same as VAT?

No. VAT is added to what you sell and only applies if your company is VAT-registered. Corporation Tax is a tax on your profit. They're separate taxes.

What is Corporation Tax? | Simple Returns

What is Corporation Tax, in one line?

Corporation Tax is a tax your company pays to HMRC on its profit. Profit is what's left after you take your genuine business costs off the money your business brought in. If your company didn't make a profit, there's usually no Corporation Tax to pay, though you may still need to file the yearly form.

It's a tax on the company, not on you. The money the company pays you, like a salary, is taxed separately under your own personal tax.

Does my company pay it?

If you run a UK limited company, yes. Just about every active limited company pays Corporation Tax on the profit it makes, and this guide is written for you. A few other kinds of organisation pay it too, like some clubs, societies, and UK branches of overseas companies, but if you're a normal small limited company, the rest of this guide is all you need.

Here's the catch most first-time directors miss: no one sends you a bill. With most taxes, a letter arrives telling you what to pay. Corporation Tax doesn't work that way. Your company has to work out its own profit, work out its own tax, and tell HMRC the figure. If you get the sum wrong or miss the date, that's on the company, which is exactly the part we take off your plate.

How does it work, step by step?

Each year your company runs through the same short cycle:

Add up the money in. Everything your business earned over the year.
Take off your business costs. Stock, wages, rent, software, work travel, and the rest. What's left is your profit.
Work out the tax on that profit. Most small companies pay 19% of it.
Tell HMRC. You send a yearly form called a Company Tax Return with the figures on it.
Pay HMRC. You pay the Corporation Tax you worked out.

Those five steps are the whole job. The hard part is steps 2 and 3, the adding-up and the sums, and that's the part we do for you.

How much is it?

Most small companies pay 19% of their profit. So on a £10,000 profit, that's £1,900 of Corporation Tax.

Companies with bigger profits pay more: the rate rises toward 25% once profits climb past £250,000, with a sliding scale in between. Almost every small company we help sits in the 19% band. We work out the right rate for your figures so you don't have to.

A simple example

Say your company earned £60,000 over the year, and you spent £35,000 running it, on stock, software, your phone bill, an accountant, and a bit of travel.

Money in: £60,000
Business costs: £35,000
Profit: £25,000
Corporation Tax at 19%: £4,750

You pay tax on the £25,000 profit, not on the full £60,000 that came in. Each allowable cost you take off lowers the profit you pay tax on. Some costs aren't allowed (we sort that out for you), so not every penny you spend counts.

When do I have to file and pay?

Your company has its own tax year, usually 12 months long. After that year ends, two dates matter:

Pay the tax: usually 9 months and 1 day after your year ends.
File the form: within 12 months of your year ending.

The pay date comes before the filing date, which catches a lot of people out. We track both dates for you and tell you what's due and when.

How is it different from the tax I pay myself, or VAT?

Three different taxes get muddled all the time:

Corporation Tax is on your company's profit. It's the one this guide is about.
The tax you pay yourself (income tax) is on your own money, like the salary or dividends the company pays you. That's separate, with its own rules.
VAT is a tax added to what you sell. It's about your sales, not your profit, and only applies once your company is VAT-registered. Plenty of small companies never deal with VAT at all.

A company can owe all three, one, or none. They don't replace each other.

What about my first year?

A brand-new company often has a first year that runs a little longer than 12 months, because the clock starts on the day Companies House set the company up. When that happens, HMRC splits it into two parts, so your first time round can mean two Corporation Tax returns instead of one. You don't have to untangle any of this: we work out the right dates and split it correctly for you.

How SimpleReturns handles it

Connect your bank or upload a statement, and we read the year's money in and out, add up the costs you're allowed, work out your profit and the tax on it, and prepare the yearly form, all for you to check before anything is sent. You don't work out a single figure, and we track the deadlines and remind you so they don't slip past.

General guidance, not advice. This guide explains how the rules generally work for small UK limited companies. It isn't tax advice for your specific situation, if you're unsure, check with us or an accountant.

What is Corporation Tax and how does it work?