Corporation Tax

Overview

Corporation Tax applies to the taxable total profits of companies and certain other bodies. The computation starts from accounts profit and adjusts for tax rules, capital allowances, losses, group relief, distributions and chargeable gains. The accounting period, associated companies, company residence and permanent-establishment position affect rates, limits and filing.

Current calculation note: For financial year 2026, the main Corporation Tax rate is 25% for profits above £250,000 and the small-profits rate is 19% for profits of £50,000 or less. Marginal Relief applies between those limits. The limits are reduced for short accounting periods and divided by the number of associated companies.

Potential scope

Potentially relevant to groups of companies, individuals, limited companies, limited liability partnerships, local authorities, non resident landlords, non uk companies with uk activities, partnerships, property developers, sole traders. The practical scope must be tested against legal form, residence or establishment, source of income or gains, ownership, connected-party relationships, transaction date, accounting or tax period, and any devolved or local rules. Jurisdiction: United Kingdom. Territorial focus: United Kingdom, subject to residence, source, territorial and devolved-tax rules.

Review points

• Identify the legal trigger and person responsible for Corporation Tax.
• Fix the relevant tax year, accounting period, transaction date and jurisdiction before using a rate or threshold.
• Check registration, filing, payment, election and claim deadlines separately.
• Document exemptions, reliefs, connected-party rules and interactions with other taxes.
• Retain an evidence trail and complete source and technical review before production publication.

Rates, thresholds and calculation basis

For financial year 2026, the main Corporation Tax rate is 25% for profits above £250,000 and the small-profits rate is 19% for profits of £50,000 or less. Marginal Relief applies between those limits. The limits are reduced for short accounting periods and divided by the number of associated companies.

Registration requirements

Confirm whether Corporation Tax requires registration, a reference number, scheme approval or notification. Identify the trigger date and submit the registration through the correct authority or online service before the statutory deadline.

Filing and reporting

Identify the correct return, schedule, payroll report, customs declaration, trust/estate return, property return or standalone notification. Reconcile the filing to accounts and supporting computations, use the correct period and effective-date rules, and disclose claims, elections or uncertainties where required. Nil, relief-only or information returns may still be required even where no tax is payable.

Payment dates and deadlines

For most companies, Corporation Tax is due 9 months and 1 day after the end of the accounting period, and the return is due 12 months after the period end. Large and very large companies may pay by quarterly instalments.

Exemptions and reliefs

Review all exemptions, allowances, de minimis rules, group or spouse transfers, business/property reliefs, treaty positions and sector-specific reliefs relevant to Corporation Tax. A relief should not be assumed from commercial purpose alone; record the statutory condition and evidence for each claim.

Elections, claims and notifications

List every election, claim, clearance, certificate, status determination or notification that may alter Corporation Tax. Record whether it is made in a return or separately, who must make it, whether all affected parties must agree, the statutory time limit, whether it is revocable and the periods or assets it covers.

Records and evidence

Retain contracts, invoices, valuations, bank and ledger records, payroll or customs data, ownership evidence, residence information, calculations, returns, elections, correspondence and proof of payment relevant to Corporation Tax. Preserve the audit trail from source document to filed figure for at least the statutory retention period and longer where an enquiry, loss, relief or historic basis remains open.

Common errors and risks

Common risks include using the wrong period’s rate; confusing legal and beneficial ownership; overlooking connected persons or group rules; treating a relief as automatic; missing a separate notification; applying accounting treatment as if it were tax treatment; failing to reconcile figures; and retaining insufficient evidence. For Corporation Tax, also check interactions with the underlying taxes and any anti-avoidance provision.

Worked example

Illustrative workflow: a taxpayer identifies a transaction potentially within Corporation Tax. The adviser fixes the transaction date and taxpayer status, determines the statutory base, checks the current rate or relief conditions, prepares the computation, identifies the return and payment dates, links the official source and records the evidence. The numerical result is not final until the facts and effective-period rules have been independently reviewed.

Related subjects

Related collections: Business Taxes, Property Taxes. Search the platform for the underlying tax, relevant reliefs, withholding or reporting rules, anti-avoidance provisions and taxpayer type. Existing aliases: none recorded.

Need a fact-specific answer?

Tax treatment depends on the exact facts, dates, documents and taxpayer status.