Corporation Tax Advice and Information

Limited companies have an obligation to pay corporation tax on the company's profits. At the end of the company's financial year the tax must be calculated and paid to the Inland Revenue. Most small businesses have to pay their tax within nine months of the end of the accounting period. Larger organisations with annual profits of above £1.5 million have to pay corporation tax quarterly. Late payment may lead to a penalty being issued and interest being applied to the outstanding amount. Penalties are normally between £100 and £1000 but this may increase if the payment of corporation tax is very late.

The tax is calculated through the use of a self assessment form, called a CT600. This will be sent to you by the Inland Revenue who will also advise you of when the payment is due.
In general other types of business do not have to pay corporation tax, however, non-limited businesses should check with the Inland Revenue to check that their type of business is not included.

Corporation Tax Rates

Corporation tax is calculated on a sliding scale depending on profitability. These rates however are not straight forward percentages. The current rates are detailed below.

For profits between £0 - £300'000 the ‘Small Companies Rate' is 20%
For profits between £300'001 and £1'500'000 the ‘Marginal Small Companies Relief' is 32.5% less relief. The relief is £1'500'000 minus the amount of profits multiplied by 1/40
Main rate is 30% for profits of £1'500'001 and above.

Many businesses will get a professional to complete the form on their behalf. It is often the case that the accountant who prepares a company's accounts will submit this form.