Corporation tax for limited companies: questions answered

Corporation tax is 19% to 25% with a 26.5% effective marginal rate in between, and the payment date falls before the filing date. This hub covers rates, reliefs, expenses and the deadlines that decide what you actually pay.

What is the corporation tax rate for a small limited company? 19% on taxable profits up to £50,000, 25% on profits above £250,000, and an effective rate between the two where marginal relief applies. Both thresholds are divided by the number of associated companies and pro-rated for short periods.

How does marginal relief work between £50,000 and £250,000? Marginal relief reduces the 25% main rate on profits between £50,000 and £250,000. Tax is calculated at 25% then reduced by 3/200 of the difference between the upper limit and profits, giving a 26.5% effective rate on profit inside the band.

When is my corporation tax payment due? Nine months and one day after the end of your accounting period. For a 31 March year end, tax is due by 1 January. Large companies with profits over £1.5m pay quarterly instalments instead.

What is the difference between the CT600 deadline and the payment deadline? The CT600 company tax return is due twelve months after the end of the accounting period. The tax itself is due nine months and one day after the period end. You pay first and file later, and each has its own penalties.

What expenses can I claim through my limited company? Anything incurred wholly and exclusively for the trade: salaries, subcontractors, software, professional fees, business insurance, travel, stock, equipment, business use of home and employer pension contributions. Entertaining clients and anything with a personal purpose are not deductible.

Can I claim my home office costs through the company? Yes, three ways: the flat £6 a week HMRC allowance with no records, a calculated proportion of actual household costs where you work from home under a homeworking arrangement, or a formal rental licence where the company pays you rent.

Can my limited company buy a car and is it tax efficient? The company can buy a car, but private use creates a benefit in kind taxed on list price × a CO2-based percentage. Electric cars are taxed at very low percentages and often make sense. Petrol and diesel cars rarely do.

How does the annual investment allowance work? The annual investment allowance gives 100% corporation tax relief on qualifying plant and machinery spending up to £1m in a twelve month period, so the full cost is deducted from profit in the year of purchase rather than written down over time.

What is full expensing and can I use it? Full expensing gives companies a 100% first year deduction on new and unused main rate plant and machinery, with no cap, plus a 50% first year allowance on new special rate assets. It applies to companies only, not sole traders.

Can I claim R&D tax relief as a small company? Yes, if your company seeks an advance in science or technology by resolving genuine technical uncertainty. Claims now run through the merged scheme, with additional support for loss-making R&D intensive SMEs, and require a pre-notification and a detailed claim submission.

What happens to corporation tax if I have associated companies? Both corporation tax thresholds are divided by the number of associated companies. Two associated companies means 19% applies only to the first £25,000 of each company's profit, and the 25% main rate starts at £125,000.

How do I carry forward a company loss? A trading loss can be set against other profits of the same period, carried back twelve months against the previous period's profits for a tax refund, or carried forward and set against future profits. Carry back and current year relief require a claim.

Rates, thresholds and deadlines quoted here reflect the 2026/27 UK position and current Companies House and HMRC guidance. Check GOV.UK, or ask us, before relying on them for your own company.