Corporation Tax is charged on a company's profits for each accounting period. HMRC does not send you a bill, so you keep records, work out the tax in a Company Tax Return, pay it and report it yourself.
Who pays
You pay Corporation Tax on profits from doing business as a limited company, as a foreign company with a UK branch or office, or as a club, co-operative or other unincorporated association, such as a community group or sports club. Sole traders and partnerships pay Income Tax under Self Assessment instead.
Taxable profits include trading profits, investment income and chargeable gains from selling assets for more than they cost. A UK-resident company pays on all its profits from the UK and abroad. A company that is not UK-resident but has an office or branch here pays only on the profits of its UK activities.
Register for Corporation Tax
When you register a company with Companies House you are usually set up for Corporation Tax at the same time. If you were not, add Corporation Tax services to your HMRC business tax account when the company starts doing business. You need the company registration number, the date it started business, the date its first accounts are made up to and its Unique Taxpayer Reference (UTR). HMRC posts an activation code to the registered office, usually within 10 days.
A company that is not doing business is usually dormant for Corporation Tax.
Know which rate applies
The rate depends on the company's profits for the accounting period, not its turnover. If the accounting period straddles a change of rate, the profits are split by days and each part is taxed at the rate that applied.
Pay the tax
You pay before you file, so you need good figures well before the return is due. Use the 17-character Corporation Tax payment reference for the accounting period. It changes every period and appears on your notice to deliver a Company Tax Return, on HMRC reminders and in the company's HMRC online account. A payment with the wrong reference can be delayed or applied to a different bill.
File the Company Tax Return
When HMRC sends you a notice to deliver a Company Tax Return, you must file it within 12 months of the end of the accounting period it covers, even if the company made a loss or owes no tax. File online. You can use paper only if you have a reasonable excuse or are filing in Welsh.
The return works out the company's profit or loss for Corporation Tax, which is not the same as the profit in its annual accounts, and the Corporation Tax bill.
Where the filing date is on or after 1 April 2026, a late return costs a flat-rate penalty of £200, or £400 if it is more than 3 months late. The amounts rise to £1,000 and £2,000 if the return is late three times in a row. If tax is still unpaid 6 months after the filing date, HMRC estimates the bill and adds a penalty of 10% of the unpaid tax, and it adds another 10% at 12 months.
You can usually correct a return within 12 months of the filing deadline.
Keep your records
Legal basis
Primary legislation and key regulations