Let us take the stress out of Self Assessment
Get your tax return sorted by experts for only £200 £100+VAT!
Take the stress out of Sole Trader Accounting, for just 1%+VAT of your money earned. No monthly subscriptions! With CrunchONE
Get 25% Off Crunch Pro and Premium for the first 3 months!

Save your seat! Live e-commerce webinar

Register and soak in the wisdom from top industry leader! May 23, 2024 1:30 PM

How much is Corporation Tax for a limited company?

Image of a person filling out taxes
Picture of crunch software on mobile

Professional Bio Templates & Examples

Create a compelling professional narrative for a proper, attention-grabbing introduction.
Website bios
Speaker intros
Professional Profile

When you’re running a limited company, you have various responsibilities and obligations, one of which is Corporation Tax. You’ll be required to pay Corporation Tax within the deadline, otherwise, you could endure a fine from HMRC. But knowing how much Corporation Tax you’ll need to pay and how to pay is important. This article will give you the rundown on limited company Corporation Tax, so you’re prepared financially and mentally to carry out your responsibilities.

What is Corporation Tax?

UK-based businesses are required to pay Corporation Tax on their profits from any UK earnings or earnings from abroad. You’re required to pay Corporation Tax if you’re a limited company, a foreign company but with a UK-based office or branch, or a club or unincorporated association such as a sports centre or community group. Corporation Tax bills aren’t sent to you to pay. There are steps that you’re required to take to ensure you’re up-to-date on your payments, which we cover later on in this article.

Corporation tax must be paid on:

  • Trading profits - any profits your limited company receives from just carrying out their service or ‘doing business’.
  • Investment income profits
  • Any chargeable gains from selling business assets for more than their cost.

It was originally introduced after the second world war as a way of reducing companies' after-tax profits, which would also then reduce the income from profits to company shareholders, in the hopes that UK businesses would retain their profits for investment which was important after WW2.

How much is Corporation Tax for a limited company in 2023/24?

In the 2023 Spring Statement, it was announced that there would be some changes that may affect some limited companies. The Corporation Tax rate will be 19-25% for the 2023/24 tax year, but not for all limited companies. We’ve provided a breakdown:

  • From the 1st of April 2023 businesses classed as ‘main rate’ will pay 25% in Corporation Tax.
  • Companies with taxable profits below £50,000 will continue to pay 19%
  • If your business profits between £50,000 and £250,000, you’ll instead be able to claim a marginal relief rate, which reduces your rate below the 25% bracket.
  • For those with more than one limited company, your companies are known as associates. The thresholds of £50,000 and £250,000 are divided by the number of associated companies you have. For example, if you have two associated companies, the threshold of £50,000 and £250,000 will fall to £25,000 and £125,000 respectively. Meaning that you’ll pay 19% on profits below £25,000 and 25% on profits above £125,000 in Corporation tax for either of your two companies.

It’s estimated that the higher rate will only affect 10% of UK businesses. Most businesses fall into the marginal relief threshold. You can use the marginal relief calculator on the gov.uk website to work out what your marginal relief will be. Alternatively, read our straightforward guide on how to pay tax, or take a look at the 2022/2023 UK tax rates, thresholds, and allowances for some more in-depth insights.

Profits Rates
Up to £50,000 19%
£50,000 - £250,000 25% and reduced by marginal relief
Above £250,000 25%

Do you pay Corporation Tax on a limited company?

Limited Companies based in the UK with offices or branches are required to pay Corporation tax on their trading profits, investment income profits, or chargeable gains from selling assets.

When you set up your limited company you’ll need to register for Corporation tax.

How to register for corporation tax

Usually, when you register your limited company with Companies House you’ll register for Corporation Tax and PAYE as an employer at the same time. If this isn’t the case, you can register separately online on the Gov.uk website. If you’re registering via post, through an agent, or through a software you’ll also need to register using this service.

You MUST register for Corporation Tax within three months of starting your limited company.

To register for Corporation Tax we’ve broken the process down into easy-to-follow steps:

  1. As you should have already registered your business with Companies House, you’ve likely already created a business tax account. Sign into your account to get started. You’ll need your Government Gateway ID and the password associated with this account to access it. You’ll also be asked for your UTR number.
  2. You’ll need to tell HMRC your company's registration number, the first date that you started to do business, and the date your annual accounts are made up of.
  3. HMRC will then inform you of your Corporation Tax deadline. You’re then required to file a Corporation Tax Return by the deadline. This is required even if you have no Corporation Tax to pay or if you’ve made a loss.

How to pay corporation tax

The deadline to pay your Corporation Tax will depend on taxable profits. For taxable profits of up to £1.5 million, you’re required to pay your Corporation Tax nine months and one day after your accounting period ends. For taxable profits of over £1.5 million, your Corporation Tax must be paid through instalments. You can check the rules for £1.5 million to £20 million on the government website and for over £20 million.

Missing your Corporation Tax deadline can result in paying interest on your bill, however, if you pay yours early, HMRC will pay you interest of 0.5%.

Note: you cannot pay your Corporation Tax by post.

Your options for how you’d like to pay depend on how quickly you want yours completed. For same day or next day, you can pay:

or

Within three working days:

Within five working days:

It’s your responsibility to make sure you plan in advance to pay your Corporation Tax bill so that it pays HMRC before any weekends and bank holidays.

What if you can’t pay your Corporation tax bill?

If you’re due to pay your Corporation Tax bill but cannot pay it, your first point of call should be to contact HMRC immediately. HMRC may suggest setting up a payment plan or ‘Time to Pay’ arrangement to spread the cost of your tax bill. This is usually only considered if HMRC believes that the instalments would be paid and you’re financially able to keep up with them, if not, you’ll be asked to pay in full.

Corporation Tax Allowances

Claiming allowable expenses is a great way to reduce your Corporation tax bill.

The most known form of allowance for both sole traders and limited companies are business costs that are required for the running and production of the business. Some examples of this are:

  • Materials
  • Equipment
  • Office Supplies
  • Business Insurance
  • Accounting and financial costs
  • Travel and accommodation expenses for business travel
  • And much more.

You can claim for anything that is solely for business use and not for personal use, however, if you’re unsure, you can contact an accountant to get clarification if a charge can be claimed as an expense.

Corporation Tax Relief

Just like Corporation Tax allowances, there are particular Corporation Tax Reliefs that can also be claimed that are specific for limited companies or those having to pay Corporation Tax:

  • Research & development costs
  • Profit from patents
  • Production of some creative media (e.g. TV, films, theatrical productions, and video games)
  • Business losses
  • Disincorporation

Making the most of any Corporation Tax Relief can be beneficial as it means you can save on the amount of Corporation Tax you have to pay on your next bill, so you can invest more money into the growth of your business.

Corporation Tax Advice

For any advice on Corporation Tax, what you need to pay, or clarification on allowable expenses or tax relief, get in touch with our Crunch expert Chartered Certified Accountants. You can also get in touch with HMRC at 0300 200 3410.

Save your seat! Live e-commerce webinar

Register and soak in the wisdom from top industry leader! May 23, 2024 1:30 PM
Dive into e-commerce basics
Expert industry insights
Practical tips and savvy tricks

Speak to an accounting expert

If you're unsure what level of support you need, our friendly team are on hand to help you pick the right package for you.
Self Assessment tax returns done for you, from just £200 £100+VAT
Take the stress out of Sole Trader Accounting, for just 1%+VAT of your money earned. No monthly subscriptions! With CrunchONE
Get 25% Off Crunch Pro and Premium for the first 3 months!
Share this post
Alexandra Moore
Content & communications specialist
Updated on
April 5, 2023

Knowledge Hubs

Take control of your accounts, today

Crunch’s effective software package includes being able to talk to an expert client manager and a Chartered Certified Accountant. You can count on Crunch to make you productive and profitable.
Picture of crunch software on mobile

Professional Bio Templates & Examples

Create a compelling professional narrative for a proper, attention-grabbing introduction.
Website bios
Speaker intros
Professional Profile

Unlock Your Free Limited Company Expense Guide!

Expert Insights
Actionable Tips
Strategic Advice

Save your seat! Live e-commerce webinar

Register and soak in the wisdom from top industry leader! May 23, 2024 1:30 PM
Dive into e-commerce basics
Expert industry insights
Practical tips and savvy tricks
Pro Tip
Boost your business finances with our Ltd Company packages!

Award-winning software with support from expert accountants

Pro Tip
Take the stress out of Sole Trader Accounting

Just 1%+VAT of your money earned. No monthly subscriptions! With CrunchONE

Pro Tip
Get 50% off your Self Assessment

Get your tax return sorted by experts for only £100+VAT!

Pro Tip
Using cloud-based accountancy software to manage your finances gives any small business a big advantage!

At Crunch we provide affordable cutting-edge, easy-to-use software with real human support from expert chartered accountants. That’s probably why 81% of our clients would recommend Crunch.

Pro Tip
Did you know - you have access to a Chartered Certified accountant for free on our paid subscriptions?

Book a call with our one accountants and get your questions answered. Just £25.50 +VAT for Crunch Free users.

Pro Tip
Get 50% off your Tax Return!

Crunch’s Self Assessment service provides an expert accountant to complete, check, and file your Self Assessment for you for just £100 +VAT.

Pro Tip
Did you know - We have a free plan that is great for sole traders and limited companies?

Why not see for yourself? It’s simple and easy to use and 100% free.