Fast, effortless and 100% online. Learn more
The total corporation tax you owe depends on two things:
Your total taxable earnings (income minus expenses) determine how much Corporation Tax you’ll need to pay and whether you’ll get any marginal relief.
You can read more about it in this guide on paying your Corporation Tax.
In your case, where your total income was £20,000 and your expenses were £3,000, your total taxable income, or profit, was £17,000.
You pay 19 on your total earnings of £17,000.
This leaves you with £3,230 tax to pay.
The total Corporation Tax you pay is £3,230
Get an accredited accountant to sort and file your annual accounts and tax return to HMRC and Companies House for a one-off, fixed price!
Corporation tax is a tax paid by businesses based on their annual profits. For limited companies, the corporation tax rate varies depending on how much profit (income minus expenses) you make.
Unlike sole traders, limited companies do not have a tax-free Personal Allowance.
Since 1st April 2023, companies with profits over £250,000 pay tax at a rate of 25%. This is known as the main rate of corporation tax. Those making less than £50,000 will pay a reduced rate of 19%.
| Profit margin | Corporation tax rate |
|---|---|
| Profits under £50,000 (small businesses) | 19% |
| Profits over £250,000 (main rate) | 25% |
| Profits between £50,000 and £250,000 | 25% – but eligible for marginal relief (see below) |
For companies with profits between £50,000 and £250,000, the main 25% rate still applies, but there’s a ‘sliding scale’ of tax relief called Marginal relief.
The more you make, the more tax you’ll pay, up to the main rate of tax.
It can be tricky, but luckily, your corporation tax calculation is automatic when you submit your annual accounts. Use our corporation tax calculator to get an estimate so you know what to expect.
If you’re unsure about your corporation tax situation and would like some professional advice, we’re here to help.
We can put you in touch with an accredited accountant who will walk you through your tax situation and offer some expert advice. Get in touch now.
Corporation tax is company-specific and is due 9 months and 1 day after the end of your accounting period.
An accounting period is typically 12 months long and ends when your company’s financial year ends.
This date is set when you register your company with Companies House.
Here’s an example:
If your financial year ends on 31 May 2024, that’s the end of your accounting period. You’ll need to:
Your corporation tax bill will be due in full or in instalments, depending on how much you owe. You can pay it online or via phone banking using this link. You can also pay it in person at your bank or building society.
Whichever method you choose, you’ll need access to your HMRC tax account to be able to pay your corporation tax bill.
Read more in our how to pay your corporation tax bill guide.
All for a one-off, fixed price! An accredited accountant will sort it all for you so you don’t have to bother with the stress. You take care of your business while we take care of your taxes.
Don’t panic if you haven’t heard anything back. HMRC will update your online account within a few days, and you’ll be able to see your payment there.
It’s always important to know what allowable expenses for limited company directors there are. These help you be as tax-efficient as possible and can lower your corporation tax bill.
Limited company expenses can be included in your corporate tax return, and you’ll receive tax relief for allowable expenses.
We can now help LTD companies file their tax return.
Same easy TaxScouts, brand new service.
You can also try our Income Tax calculator if you need to file a Self Assessment tax return as a limited company director!
Now that you know how to calculate Corporation Tax, you’re ready to delve deeper into the world of tax on limited companies in the UK! (Can we get a whoop whoop?)
Here are our top read articles on limited companies and their tax implications.
Sign up for important updates, deadline reminders and basic tax hacks sent straight to your inbox.
"*" indicates required fields
