Your limited company must pay Corporation Tax on its taxable profits.
Corporation Tax also applies to:
- most unincorporated associations, eg clubs and co-operatives
- foreign companies with a UK branch or office
Your company must keep records for Corporation Tax.
Profits you pay Corporation Tax on
Taxable profits include the money your company makes from:
- doing business (‘trading profits’)
- selling assets for more than they cost (‘chargeable gains’)
If your company is based in the UK, it pays Corporation Tax on all its profits from the UK and abroad.
If your company isn’t based in the UK but has an office or branch here, it only pays Corporation Tax on profits from its UK activities.
Set up for Corporation Tax
You must set up for Corporation Tax if you’re starting a limited company.
If you’re starting an unincorporated association, write to HM Revenue and Customs (HMRC) to ask to be set up for Corporation Tax. HMRCwill send you a form to fill in and return.
Pay and report Corporation Tax
You don’t get a bill for Corporation Tax – it’s up to you to work out how much your company owes. You report Corporation Tax after you pay it, by filing a Company Tax Return.
Unincorporated associations and foreign companies follow the same steps as limited companies.
- Check your deadlines for paying and filing your Company Tax Return – these depend on your company’s financial year.
- Work out your company’s taxable profits by preparing annual accounts – most small companies and associations can useHMRC’s online accounts template.
- Check Corporation Tax rates and reliefs – take total reliefs you can claim away from taxable profits, then multiply the result by your rate to work out how much Corporation Tax to pay.
- Pay Corporation Tax.
- Report Corporation Tax by filing your Company Tax Return.
Call the helpline if you have questions about Corporation Tax.
If you have nothing to pay
Tell HMRC that no payment is due – you must do this by your deadline for paying. You must still file your Company Tax Return.
If your business is dormant
Companies and associations don’t always have to pay Corporation Tax or file Company Tax Returns if they aren’t active (sometimes called ‘dormant’ or ‘non-trading’).
HMRC may decide that your company or association is dormant if it:
- isn’t doing business or receiving income
- is an unincorporated association that owes less than £100 Corporation Tax
- is a flat management company that qualifies as dormant
There are additional requirements for dormant unincorporated associations.
You’ll get a letter from HMRC telling you if you don’t have to pay Corporation Tax or file Company Tax Returns.
You must still file a Company Tax Return if HMRC tells you to by letter.
Check if your company is also dormant for Companies House annual accounts.
If your dormant business becomes active again
You must tell HMRC if your company becomes active again. You’ll get a letter from HMRC telling you if it must pay Corporation Tax and file Company Tax Returns.
Write to tell your Corporation Tax office if your association becomes active again. Check recent tax forms or letters from HMRC for the tax office address or call the helpline.
You must include your association’s latest annual accounts. If your association doesn’t prepare annual accounts, include its latest annual statement of income and expenditure and its rules or constitution.
You’ll get a letter from HMRC telling you if your association must pay Corporation Tax and file Company Tax Returns.