Limited company tax guide
Limited company taxes explained, including Corporation Tax, VAT, PAYE, employer National Insurance, dividend tax, business rates and tax on company cars.
Short answer
A limited company usually pays Corporation Tax at 19% to 25% of taxable profit. It may also collect VAT, operate PAYE, pay employer National Insurance and business rates, while directors and shareholders pay personal tax on salary, benefits and dividends.
Written and reviewed by Waqas Sagar Member of ICAEW, Fellow of ACCA, Fellow of AAT, a double graduate and entrepreneur at heart, helping startups grow and serving thousands of businesses nationwide with an excellent team. Published by LimitedCompany.Accountants, 12 London Road, Morden, London SM4 5BQ. Reviewed 12 September 2026 against 2026/27 UK rates and current Companies House and HMRC guidance.
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QuickBooks PartnerCertified ProAdvisor100+ yearsCombined team experienceFully insuredUp to £2m indemnityThere is no single limited company tax rate because the company and its owners have separate liabilities. The total depends on profit, extraction, employees, VAT status, premises, benefits, financing and whether profits stay in the business.
Corporation Tax is 19% to 25%
VAT registration starts above £90,000 taxable turnover
Payroll can create PAYE and employer NIC
Shareholders may pay dividend tax
A standalone company generally pays 19% on taxable profits up to £50,000, 25% above £250,000 and a marginal rate between. The thresholds are divided for associated companies and reduced for short periods.
Taxable profit differs from accounting profit because depreciation, entertaining and other disallowable costs are added back, while capital allowances, losses and reliefs may reduce the charge.
A business must normally register once taxable turnover exceeds £90,000 in a rolling 12 month period, or when it expects to exceed the threshold in the next 30 days alone. Voluntary registration can help where customers are VAT registered and costs carry input tax.
VAT belongs to HMRC after allowable input tax, so keeping it in a separate reserve prevents cash flow pressure at the quarterly payment date.
Salary can create employee PAYE and National Insurance deductions plus employer National Insurance. Employers also have workplace pension duties and may qualify for Employment Allowance, although single-director companies often do not.
Salary is normally deductible for Corporation Tax when commercial and properly processed. Dividends are paid from post-tax distributable reserves and are not deductible.
The individual pays Income Tax on salary, taxable benefits and dividends above available allowances. A director can also face beneficial loan tax where the company provides an interest-free or low-interest loan.
Selling shares or winding up the company can create Capital Gains Tax, with Business Asset Disposal Relief only where all qualifying conditions are met.
Depending on activities, a company may encounter business rates, Stamp Duty Land Tax, Annual Tax on Enveloped Dwellings, Construction Industry Scheme deductions, customs duties, Insurance Premium Tax or sector-specific levies.
Build a tax calendar and reserve cash monthly rather than treating the year-end bill as one surprise. Rates and deadlines are reviewed for 2026/27, but HMRC interest rates and individual circumstances can change the result. Check the linked official guidance or ask us before acting.
Primary references
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We work with company directors across London and Surrey from our office at 12 London Road, Morden, London SM4 5BQ. Pick your area, or send the form below and we will call you back.
Frequently asked
Corporation Tax is generally 19% to 25% of taxable profit, with marginal relief between £50,000 and £250,000 for a standalone company.
Corporation Tax applies to taxable profit, but VAT registration is measured using taxable turnover.
Usually when value is extracted as salary, benefits, dividends, interest or an overdrawn loan. The company and director are separate taxpayers.
The company first pays Corporation Tax on profit, then the shareholder may pay dividend tax when post-tax profit is distributed.
Forecast the actual liability. A rough 19% reserve can be too low where profits enter marginal relief or PAYE, VAT and other taxes are due.
No. Registration is normally compulsory only after taxable turnover crosses £90,000, though voluntary registration is possible.
Keep bank statements, sales and platform reports, purchase invoices, payroll records, VAT workings, finance agreements and Companies House correspondence. We confirm the exact list at onboarding and identify gaps before a filing deadline becomes urgent.
The fee depends on transaction volume, record quality, VAT and payroll requirements, historic catch-up and the level of reporting needed. We agree a fixed scope and price before technical work starts, with published packages available on our fees page.
Yes. We request professional clearance, collect the prior records and authorities, check the next Companies House and HMRC deadlines, and give you one clear handover list. The process is normally completed remotely.
Yes. We work through secure cloud records, scheduled reviews and digital approvals, while keeping a named team available by phone, video call and email. Clients can also visit our Morden office by appointment.
Included approach
Check the current rules
Deadlines, thresholds and filing rules change. GOV.UK and Companies House publish the current statutory position; advice should then be applied to your company’s circumstances.
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