?>
By At TT Accountancy, we help London businesses navigate the complexities of Corporation Tax efficiently. Whether you’re a startup or established company, this comprehensive guide explains everything you need to know about UK Corporation Tax in clear, actionable terms.
What is Corporation Tax?
Corporation Tax is a tax on profits made by:
- UK limited companies
- Foreign companies with UK branches
- Clubs, co-operatives and unincorporated associations
Current Rates (2024/25):
- Main rate: 25% (profits over £250,000)
- Small profits rate: 19% (profits under £50,000)
- Marginal relief applies between £50,000-£250,000
“Many clients don’t realize they can reduce their effective tax rate to 21.5% through proper planning.”
— James Wilson, Senior Tax Advisor
Who Needs to Pay Corporation Tax?
You must register if your company:
✔ Is incorporated in the UK
✔ Does business in the UK
✔ Has taxable profits
✔ Receives income from UK land or property
Key Deadlines:
- Registration: Within 3 months of starting business
- Payment: 9 months and 1 day after accounting period ends
- Filing: 12 months after accounting period ends
What Counts as Taxable Profit?
Included:
- Trading profits
- Investment income
- Capital gains
- Rental income
Deductible Expenses:
✔ Staff salaries
✔ Raw materials
✔ Business premises costs
✔ Equipment purchases (via Capital Allowances)
✔ Research & Development (R&D) costs
How to Calculate Your Corporation Tax
Basic Formula:
Taxable Profit = Total Income – Allowable Expenses
Tax Due = Taxable Profit × Applicable Tax Rate
Example Calculation:
Annual Profit: £120,000
Allowable Expenses: £45,000
Taxable Profit: £75,000
Tax Due: £75,000 × 19% = £14,250
5 Ways to Reduce Your Corporation Tax Bill
- Claim R&D Tax Credits (Up to 33% refund)
- Use Capital Allowances (100% on qualifying equipment)
- Make Pension Contributions (Tax-deductible)
- Claim Trading Losses (Offset against future profits)
- Utilize Marginal Relief (If profits between £50k-£250k)
Common Corporation Tax Mistakes
❌ Missing payment deadlines (5% penalty + interest)
❌ Not claiming all allowable expenses
❌ Mixing personal and business expenses
❌ Incorrect profit calculations
❌ Forgetting to register when required
Making Tax Digital (MTD) for Corporation Tax
Coming 2026: All companies must:
- Keep digital records
- Use compatible software
- Submit quarterly updates
Our Recommended MTD Software:
- Xero (Best for SMEs)
- QuickBooks (Great for startups)
- Sage (Ideal for larger businesses)
Why Choose TT Accountancy for Your Corporation Tax?
Our Corporate Tax Package includes:
✔ CT600 preparation and filing
✔ Tax planning consultations
✔ R&D tax credit claims
✔ Capital allowances optimization
✔ MTD compliance setup
Case Study:
A London tech startup saved £28,000 in their first year through our R&D tax credit claim and proper expense tracking.
Corporation Tax FAQs
Q: When does my accounting period start?
A: Typically your company incorporation date, but can be changed.
Q: Can I get an extension for filing?
A: No – HMRC doesn’t grant extensions for Corporation Tax returns.
Q: What if my company makes a loss?
A: You may carry losses forward or back to offset against profits.
Q: How is Corporation Tax different from VAT?
A: VAT is a consumption tax, while Corporation Tax is on profits.
Need Help With Your Corporation Tax?
📞 Call 02039741266
📧 thomas@ttaccountancy.com
🌐 Book a Free Consultation
*”TT Accountancy reduced our tax liability by 37% in the first year – their proactive approach is invaluable.”*
— David K., Fintech Founder
