What Is Corporation Tax & How Is It Calculated

Corporation Tax is paid on the taxable profits from: a limited company; a Public Limited Company (PLC); any foreign company with a UK branch or office; a club, co-operative, or other independent association. For example, a community group or sports club. 

Taxable profits include trading profits and investment income. They also include capital gains which are known as chargeable gains for Corporation Tax. 

If your company is based in the UK, you pay Corporation Tax on all taxable profits, even if they come from abroad. If your company is not based in the UK but has an office or branch here, you only pay Corporation Tax on the profits from its UK activities. 

You do not get a bill for Corporation Tax. However, there are things you must do. 

You must register for Corporation Tax within 3 months of starting your business or restarting a dormant business. You can register through your Business Tax Account. Most companies do this when they register with Companies House. Independent associations must write to HMRC. 

To work out how much Corporation Tax to pay, you need to keep accounting records and send a Company Tax Return. You must do this even if you make a loss, there is no tax to pay, or you get a ‘notice to file a Company Tax Return’ from HMRC. 

The deadline for sending your tax return is 12 months after the end of the accounting period it covers. If you miss the deadline, you may be charged a penalty. You also need to pay any Corporation Tax due.  Please note, the deadline for this is usually 9 months and 1 day after the end of your accounting period – so, before the deadline for sending your tax return.