Learning Centre · Corporation Tax

Corporation Tax

Corporation tax is the tax your limited company pays on its profits — broadly, sales minus allowable expenses. Sounds simple, but the rules around director's loans, allowable deductions and HMRC payment references generate a steady stream of questions. These guides cover how the bill is calculated, how to pay it, and the most common areas where directors get caught out.

1 guide 6 key facts Annual cycle covered Reviewed by qualified accountants

Key facts

The headline figures

19%

Small profits rate

Profits up to £50,000 (2025/26)

25%

Main rate

Profits over £250,000 (2025/26)

26.5%

Marginal rate

Effective rate on profits between £50k and £250k

9 months + 1 day

Payment due

After the end of your accounting period

12 months

Filing deadline

Submit your CT600 within 12 months of period end

33.75%

S455 charge on director's loans

Tax on loans not repaid within 9 months 1 day of year-end

Annual cycle

Key dates and deadlines

The events you can't afford to miss in a typical year.

Start of accounting period
Tax year begins
Usually 12 months. Could be shorter for a first or final year.
End of accounting period
Profits crystallise
Your accountants prepare statutory accounts and the CT600 (corporation tax return).
+9 months and 1 day
Corporation tax payment due
Pay HMRC. Use your 17-character reference for the right accounting period.
+12 months
CT600 filing deadline
Submit your corporation tax return to HMRC. Late filing triggers automatic penalties.
Within 3 months of starting
Tell HMRC you've started trading
Required even if you've already registered the company at Companies House. Form CT41G or via your business tax account.

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Read our Corporation Tax guides

Plain-English walkthroughs of the most common questions clients ask.

1
Limited companyDirector
How is S455 tax calculated on a director's loan and how can it be avoided or reclaimed?
S455 tax is a Corporation Tax charge on your company, applied to outstanding director's loans not repaid within 9 months and 1 day of your company's year-end.

Useful resources

Official tools and references

Quick answers

Corporation Tax FAQs

How is corporation tax calculated?

Your accounts show a 'profit before tax'. Your accountants then adjust this for tax purposes (disallowing entertaining, adding back depreciation and replacing with capital allowances, claiming any reliefs). The resulting taxable profit is taxed at 19% if under £50k, 25% if over £250k, and at the marginal effective rate of 26.5% in between.

What is S455 tax on director's loans?

If a director has borrowed money from their own company (an overdrawn director's loan account) and hasn't repaid it within 9 months and 1 day of year-end, the company pays a temporary tax charge of 33.75% on the outstanding balance. It's refundable once the loan is repaid — but it ties up cash in the meantime.

When do I have to pay corporation tax in instalments?

If your taxable profits exceed £1.5 million in a single accounting period, you pay quarterly instalments instead of one lump sum. Most small companies won't hit this.

Can I delay paying corporation tax if cash is tight?

Talk to HMRC — they sometimes agree a 'time to pay' arrangement, especially if you contact them early and have a credible plan. Interest still accrues, but at least the company isn't formally in arrears.

What reliefs can reduce my corporation tax?

The big ones for small companies: capital allowances on equipment (often 100% in year of purchase via the Annual Investment Allowance), R&D tax credits if you're doing qualifying innovation work, and patent box for IP income. Your accountant should be reviewing these every year.

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