When do I pay corporation tax UK?

Within 9 months and 1 day of your company's accounting year end. Your CT600 tax return must be filed within 12 months of year end.

How can I reduce corporation tax UK?

Maximise director pension contributions claim all allowable expenses claim capital allowances on equipment and explore R&D tax credits if applicable.

Tax & HMRC ⏱ 2 min read 📅 Updated Apr 2026

What Is Corporation Tax UK? 2026 Rates and How It Works

Q: What is corporation tax UK?

Corporation tax is paid by UK limited companies on their taxable profits. The rate is 19% on profits up to £50,000 rising to 25% on profits over £250,000 in 2026.

Chandraketu Tripathi

Finance Editor, Kaeltripton

Published 3 Apr 2026

Last reviewed 20 Apr 2026

✓ Fact-checked

What Is Corporation Tax UK? 2026 Rates and How It Works

Business Tax Guide — April 2026

Corporation tax is the tax paid by UK limited companies on their taxable profits. It is charged on profits from trading investments and the sale of assets. Sole traders and partnerships do not pay corporation tax — they pay income tax and NI through Self Assessment instead.

Corporation Tax Rates UK 2026

Profit Level	Rate	Notes
Up to £50,000	19%	Small profits rate
£50,001 to £250,000	19–25% marginal relief	Rate tapers between the two thresholds
Over £250,000	25%	Main rate

Important: The thresholds are divided by the number of associated companies. If you have two associated companies the small profits threshold is £25,000 each not £50,000 each.

How Corporation Tax Works

Step	What Happens
1	Your company's accounting period ends (usually 12 months)
2	Calculate taxable profits — turnover minus allowable expenses
3	Submit Company Tax Return (CT600) to HMRC within 12 months of year end
4	Pay corporation tax within 9 months and 1 day of year end
5	HMRC issues a notice of assessment

What Can You Deduct from Corporation Tax?

Salaries and employer NI contributions
Office rent utilities and business rates
Equipment and machinery (capital allowances)
Professional fees — accountants lawyers
Business travel and subsistence
Marketing and advertising costs
Pension contributions made by the company
Business insurance premiums
Research and development costs (R&D relief)

How to Reduce Corporation Tax

Maximise salary and pension contributions — both deductible before corporation tax
Claim all allowable expenses diligently
Claim Annual Investment Allowance on equipment up to £1 million
Claim R&D tax credits if you develop new products or processes
Consider timing of large purchases to fall in the right accounting period
Use tax-efficient employee benefits through salary sacrifice

Bottom line: Corporation tax at 19–25% is the main cost of operating as a limited company. The most effective reductions are maximising director pension contributions (company pays into your pension reducing both corporation tax and potentially NI) and claiming every allowable expense. Always use a qualified accountant — the cost is deductible and pays for itself.

By Chandraketu Tripathi · Updated April 2026 · kaeltripton.com

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The content on Kaeltripton.com is for informational and educational purposes only and does not constitute financial, investment, tax, legal or regulatory advice. Kaeltripton.com is not authorised or regulated by the Financial Conduct Authority (FCA) and is not a financial adviser, mortgage broker, insurance intermediary or investment firm. Nothing on this site should be construed as a personal recommendation. Rates, figures and product details are indicative only, subject to change without notice, and should always be verified directly with the relevant provider, HMRC, the FCA register, the Bank of England, Ofgem or other appropriate authority before any financial decision is made. Past performance is not a reliable indicator of future results. If you require regulated financial advice, please consult a qualified adviser authorised by the FCA.

Chandraketu Tripathi

Finance Editor · Kaeltripton.com

Chandraketu (CK) Tripathi, founder and lead editor of Kael Tripton. 22 years in finance and marketing across 23 markets. Writes on UK personal finance, tax, mortgages, insurance, energy, and investing. Sources: HMRC, FCA, Ofgem, BoE, ONS.