Corporation Tax guide – CT600, rates & deadlines for small companies

All UK limited companies – big and small – pay tax on their annual profits. This is Corporation Tax.

Dealing with your Corporation Tax is one of your accountant’s key duties. However, it is the directors of a limited company – who are ultimately responsible for maintaining and delivering accurate company accounts.

As a limited company director, you must make sure that your company’s Corporation Tax calculation is correct, the company tax return is filed with Companies House HMRC on time, and any tax is paid to HMRC by your deadline.

If you are setting up a limited company for the first time, here is an overview of how Corporation Tax works, and how to reduce your tax bill using capital allowances and reliefs.

This guide has been updated for the 2025–26 tax year.

Which businesses pay Corporation Tax?

All UK limited companies pay Corporation Tax. The tax is charged as a percentage of the annual profits made by a company.

Sole traders and partnerships don’t pay Corporation Tax. If you are self-employed, you pay tax on your business profits via the annual Self Assessment system – by 31st January of the following tax year.

For more details on the self-employment route, read our guides on how to set up as a sole trader and tax for the self-employed.

Corporation Tax also applies to:

• Members’ clubs, societies and associations
• Trade associations
• Housing associations
• Groups of individuals carrying on a business but not as a partnership (e.g. co‑operatives)

Registering a new company

When you form a new limited company with Companies House, HMRC is automatically notified of the new company’s existence.

However, you still need to formally register your company for Corporation Tax within three months of starting to trade, carry out business activity, or receive income. This applies even if HMRC already knows your company exists.

You can do this on the Gov.UK site.

HMRC will typically send a letter to your company’s registered office address shortly after formation. This will include your company’s Unique Taxpayer Reference (UTR) and details of how to register for Corporation Tax online.

Once you’ve appointed an accountant, you can authorise them to deal with HMRC on your company’s behalf – a process known as ‘appointing an agent’.

This can be done online, or using paper forms available on the HMRC website.

Corporation Tax rates from April 2023 (and unchanged for 2025–26)

• Profits up to £50,000 – taxed at 19%
• Profits between £50,000 and £250,000 – marginal relief, effective rate of ~26.5%
• Profits over £250,000 – taxed at 25%

What were the Corporation Tax rates historically?

Until April 2015, there were separate ‘small profits’ and ‘main’ rates with marginal relief between thresholds. Since then, rates have been unified, with the most recent rate shifts occurring in 2023 (small rate stayed at 19%, main rate rose to 25%).

Corporation Tax self assessment – CT600

The CT600 must be filed online each year. Although your accountant will usually complete it, as a director you’re ultimately responsible for the accuracy of your accounts.

Any errors or omissions – even if they are minor and/or unintentional – can lead to sizeable HMRC penalties.

The CT600 must include:

• Company name, registration number, office address, tax reference
• Turnover, profits, tax calculation
• Details of allowances and reliefs claimed

Only relevant sections of the 11-page form need to be completed. You can download a copy here.

Accounting periods

Most companies use a 12-month accounting period, but shorter periods are also acceptable. You can change your year end to better align with other statutory deadlines.

Corporation Tax deadlines and penalties

Your CT600 can be submitted any time from your year end to:

• 12 months after year end, or
• 3 months after HMRC issues a return notice (whichever is later)

If your return is late or inaccurate, you – not your accountant – are liable.

There is always at least 3 months from the notice date, but don’t leave it until the end.

Late filing penalties:

• 1 day late: £100
• 3 months late: +£100
• 6 months late: 10% of tax due (estimated)
• 12 months late: another 10% of unpaid tax

Your tax must be paid 9 months and 1 day after year end. For example, a 31 March year end requires payment by 1 January. Late payments incur interest.

What if you make a mistake?

You can amend your return within 12 months of the statutory filing date.

HMRC may also amend obvious errors up to 9 months after filing. They focus on correcting calculation errors, omissions or mistakes of principle – and you can’t appeal these corrections, but you can amend to challenge them.

Reducing your Corporation Tax bill

Since tax is based on profit, managing profit legally is key:

• Claim all allowable expenses – e.g. travel, subsistence, software, agency fees
• Lease equipment or vehicles instead of buying
• Offset past losses against future profits (with rules)
• Use salary and dividends – wages are tax-deductible; dividends avoid NICs
• Salary sacrifice schemes like cycle-to-work or childcare vouchers can cut employer NI

Capital allowances and reliefs:

• Annual Investment Allowance (AIA) – up to £1 million per year
• Full expensing – 100% first-year deduction for new unused main-rate plant and machinery
• Writing Down Allowance (WDA) – 18% for main pool, 6% for special rate
• First-Year Allowances – 50% for special-rate assets
• R&D tax relief – generous deductions for qualifying innovation

Read our guide to capital allowances for more details.

R&D Tax Relief

If your business undertakes tech or product innovation, you may qualify under R&D relief. Many smaller companies overlook this, so it’s worth exploring.

Paying yourself tax efficiently

Pay yourself a low salary (deductible) and take the rest as dividends (no NICs are payable).

This is a common, tax-efficient approach – wage income is still subject to income tax.

See our guide to dividend tax.

Keeping tax records

Legally you must retain records for at least 6 years: invoices, receipts, bank statements, tax documents.

Digital storage (scans, cloud accounting) is fully accepted.

Read our guide to choosing and using accounting software.

Summary table – 2025–26 at a glance

Topic	Status for 2025–26
Profits up to £50k	19% CT
Profits £50k–£250k	Marginal relief (~26.5%)
Profits over £250k	25% CT
AIA limit	£1 million/year
Full expensing	100% first-year write-off
Late filing penalties	£100 → £100 → 10% → 10%
Payment deadline	9 months + 1 day after year end
Return amendments	Within 12 months of filing deadline