UK Corporation Tax Calculator

What is Corporation Tax?

Corporation Tax is a tax paid by UK limited companies on their annual profits. Unlike personal income tax, there is no "tax-free allowance" for Corporation Tax; every pound of profit is taxable. Companies must calculate their own tax liability and pay HMRC within 9 months and 1 day after the end of their accounting period. Failure to pay on time or file a Company Tax Return (CT600) can result in significant penalties.

Your "taxable profit" is the money your company earns from trading and investments, minus business expenses and capital allowances. It is essential to keep accurate records throughout the year to ensure you are not overpaying or underpaying your tax.

Current UK Corporation Tax Rates

From April 2023, the UK introduced a tiered system for Corporation Tax:

• Small Profits Rate (19%): Applied to companies with profits below £50,000.
• Main Rate (25%): Applied to companies with profits over £250,000.
• Marginal Relief: Provides a gradual increase in the tax rate for companies with profits between £50,000 and £250,000. Our calculator provides a simplified estimate based on the selected rate.

How to Reduce Corporation Tax Legally

Companies can reduce their tax bill by claiming all legitimate business expenses. Common deductions include employee salaries, specialized software, office rent, and travel costs. Additionally, Capital Allowances allow you to deduct the cost of business assets (like machinery or technology) from your profits before tax is calculated.

See also:

• UK VAT Calculator
• Limited Company Dividend Calculator