What Is Corporation Tax in the UK? Rates, CT600 Filing Deadlines and Return Requirements

Corporation Tax is a tax charged on the taxable profits of UK limited companies and certain organisations, including clubs, associations, and co-operatives. Taxable profits may include trading profits, investment income, and chargeable gains from selling company assets.

As of April 2024, the main Corporation Tax rate is 25% for companies with profits over £250,000, while companies with profits up to £50,000 pay 19%. Companies with profits between these thresholds may qualify for Marginal Relief, which gradually adjusts the effective tax rate.

Even if a company makes no profit, it is generally required to submit a Corporation Tax return (CT600) to HMRC each year unless the company is officially registered as dormant for Corporation Tax purposes.

For a broader understanding of Corporation Tax planning, filing processes, and compliance strategies, see our Complete Guide to UK Corporation Tax for Businesses.

Who Must Pay Corporation Tax?

All UK limited companies must pay Corporation Tax on their taxable profits. Some clubs, societies, associations, and co-operatives may also be liable if they operate as corporate entities.

Sole traders and partnerships do not pay Corporation Tax; instead, they pay Income Tax through the Self Assessment system.

While accountants often prepare tax computations and returns, company directors remain legally responsible for ensuring Corporation Tax returns are filed accurately and on time and that tax is paid by the due date.

Related post – The Complete Guide to UK Corporation Tax for Businesses

Registering for Corporation Tax with HMRC

After incorporating a company, businesses must register for Corporation Tax with HMRC within three months of starting business activities or becoming liable for Corporation Tax.

Registration typically requires the following information:

• Company name and registration number
• Registered office address
• Business start date
• Nature of business activities
• Accounting period end date
• Director details

HMRC will then issue a Unique Taxpayer Reference (UTR), which is required when submitting Corporation Tax returns.

What Is a CT600 Corporation Tax Return?

The CT600 is the official Corporation Tax return submitted annually to HMRC. It reports:

• Company profits and tax calculations
• Allowable expenses and tax reliefs
• Corporation Tax payable
• Supporting statutory accounts and financial statements

Most companies must submit CT600 returns electronically using HMRC-approved software together with their statutory accounts and tax computations.

CT600 Filing Deadline and Corporation Tax Payment Dates

Companies must meet two important deadlines:

• Corporation Tax payment deadline: Usually nine months and one day after the end of the accounting period
• CT600 filing deadline: 12 months after the end of the accounting period

For example, if a company’s accounting period ends on 31 March, the Corporation Tax payment is normally due on 1 January of the following year, while the CT600 filing deadline is 31 March the following year.

Large companies that exceed HMRC quarterly instalment payment thresholds may be required to pay Corporation Tax in quarterly instalments instead of a single payment.

How Is Corporation Tax Calculated?

Corporation Tax is calculated based on a company’s taxable profits after deducting allowable business expenses, capital allowances, and any eligible reliefs. These may include:

• Staff salaries and operating costs
• Office and equipment expenses
• Capital allowances on assets
• Research and development (R&D) relief
• Loss relief from previous years

Accurate record-keeping is essential to ensure correct tax calculations and compliance with HMRC requirements.

Companies must also stay compliant with UK VAT return due dates, payments, and penalties where applicable

How to Pay Corporation Tax

Corporation Tax payments must reach HMRC before the due date to avoid penalties and interest charges. Payment methods include:

• Online or telephone banking
• CHAPS or Faster Payments
• Direct Debit
• Bank or building society payments

If the payment due date falls on a weekend or public holiday, companies should ensure payment is made on the previous working day.

HMRC may apply penalties if Corporation Tax returns are filed late or payments are delayed.

Businesses should also understand potential HMRC late payment penalties to avoid additional compliance costs

Late filing penalties

• £100 penalty if the Corporation Tax return is late by one day
• An additional £100 penalty if more than three months late
• If the return is six months late, HMRC may estimate the Corporation Tax due and apply a penalty of 10% of unpaid tax
• A further 10% penalty may apply if the return is 12 months late

Late payment

Late payments may result in interest charges and possible recovery actions by HMRC until the outstanding tax is paid.

Incorrect returns

Submitting inaccurate information may lead to penalties ranging from 15% to 100% of the tax due, depending on whether the error was accidental or deliberate.

If errors are discovered after submission, companies should correct the statutory accounts and notify Companies House where applicable.

Do Loss-Making Companies Need to File CT600?

Yes. Even if a company makes a loss or has no Corporation Tax to pay, a CT600 return must still be submitted each year unless HMRC has confirmed the company is dormant for Corporation Tax purposes.

Cost of Preparing a Corporation Tax Return

The cost of preparing a Corporation Tax return varies depending on the size of the company, the number of transactions, and the complexity of financial records. Smaller companies typically incur lower preparation fees, while larger businesses may require more advanced compliance and tax planning services.

Conclusion

Understanding Corporation Tax obligations, CT600 filing requirements, and payment deadlines is essential for maintaining HMRC compliance. Timely filing, accurate financial reporting, and proper tax planning help businesses avoid penalties while ensuring efficient tax management.

Frequently Asked Questions

What is Corporation Tax in the UK?

Corporation Tax is a tax paid by limited companies on their taxable profits, including trading income, investments, and capital gains.

When is CT600 due?

The CT600 must normally be filed within 12 months of the end of the accounting period.

Who must file a Corporation Tax return?

All UK limited companies and certain incorporated organisations must submit CT600 returns annually.

What happens if Corporation Tax is paid late?

Late payments may result in interest charges and potential penalties from HMRC.

How much Corporation Tax do limited companies pay?

Companies currently pay between 19% and 25%, depending on their profit levels and eligibility for Marginal Relief.