How Much Tax Does a Limited Company Pay in the UK?

3rd October 2026 | 10 min read

Introduction

When you set up a limited company, you create something new in the eyes of the law: a separate business that earns its own money, owns its own assets, and pays its own tax. It’s one of the biggest mindset shifts for first-time directors. The money in your company’s bank account isn’t yours, and the tax your company owes is completely separate from anything you pay personally on your salary or dividends.

Getting to grips with this early can save you a lot of stress, and money, down the line. In this article, we’ll explain how Corporation Tax works and how much your company is likely to pay, the deadlines HMRC expects you to meet, and why your first year of accounts often needs two tax returns instead of one. We’ll also look at the other taxes your business might face, and the allowances and reliefs that could help reduce your bill.

The main tax: Corporation Tax

Your tax rate depends on how much profit your company makes:

• Profits under £50,000: You pay the Small Profits Rate, which is 19%.
• Profits between £50,000 and £250,000: You pay the 25% Main Rate, reduced by Marginal Relief, so your overall rate falls somewhere between 19% and 25%.
• Profits over £250,000: You pay the Main Rate, which is 25%.
• These thresholds are reduced if your company has associated companies under common control, or if your accounting period is shorter than 12 months.

If your company makes a taxable profit of £10,000, your Corporation Tax bill will be £1,900 (£10,000 × 19%).

Even if your company makes a loss or £0 profit, you still need to file a CT600 return to report that no tax is owed.

Your Corporation Tax obligations (HMRC)

Your company must:

• register for Corporation Tax within 3 months of starting to trade,
• pay any tax owed within 9 months and 1 day after your accounting period ends, and
• file your Company Tax Return (CT600) within 12 months of your accounting period ending.

When you incorporate a new company, Companies House automatically sets your first financial year-end to the end of your anniversary month. This usually creates a first period of accounts that is slightly longer than 12 months.

Because an HMRC accounting period can never exceed 12 months, the timeline is automatically split. One thing to note: your first Corporation Tax period starts when your company begins trading, which isn’t always the day you incorporate.

The split-period example

Imagine you register your company and start trading on 4 September 2026. Companies House sets your first financial year-end to 30 September 2027.

Your single set of statutory accounts covers 12 months and 27 days. HMRC will split this into two separate Corporation Tax periods:

• Period 1 (the first 12 months): 4 September 2026 to 3 September 2027
• Period 2 (the 27-day stub, meaning the short leftover period): 4 September 2027 to 30 September 2027

How profits and deadlines are affected

For this extended first year, you face dual deadlines and must split your total financial figures.

1. Apportioning the profit

For example, if your company makes £38,200 total taxable profit over the entire 392-day period, you must split the profits on a daily basis between the two tax returns:

• Period 1: 365 ÷ 392 × £38,200 = £35,568.88
• Period 2: 27 ÷ 392 × £38,200 = £2,631.12

Remember those reduced thresholds for short periods? Here’s one in action. For the 27-day stub, the £50,000 small profits limit shrinks to around £3,699 (27 ÷ 365 × £50,000). Period 2’s profit of £2,631 is below that, so it’s still taxed at 19%.

2. Your deadlines

Each period has its own payment deadline. But because your period of accounts is no longer than 18 months, both returns share the same filing deadline.

Tax period	Days	Profit	Payment deadline (9 months and 1 day)	CT600 filing deadline
Period 1: 4 Sep 2026 to 3 Sep 2027	365	£35,568.88	4 June 2028	30 Sep 2028
Period 2: 4 Sep 2027 to 30 Sep 2027	27	£2,631.12	1 July 2028	30 Sep 2028

Under the tax legislation (Finance Act 1998, Schedule 18), when a period of accounts is longer than 12 months but no more than 18, the filing date for both returns is 12 months after the end of the period of accounts. That makes both CT600s due on 30 September 2028.

To be safe, check the Notice to Deliver a Return HMRC sends, or simply file by 3 September 2028, since you’ll be preparing them together anyway.

Companies House: Your first accounts have a separate deadline: 21 months after incorporation. In this example, that’s around 4 June 2028, the same day your Period 1 tax payment is due.

3. What you actually submit

When using online tax software, you will complete two separate CT600 forms. You will attach the same single set of accounts to both submissions so HMRC can verify how the numbers were divided.

Following this first long period, your financial years will shift to a standard 12-month cycle (for example, 1 October to 30 September), requiring only one CT600 moving forward.

4. How it’s done in practice

• Most companies use accountancy software or an accountant to file the CT600 and the iXBRL accounts online.
• HMRC’s free online filing service closed in March 2026, so you’ll now need HMRC-recognised commercial software or an accountant to file your return.
• HMRC will send a “notice to deliver a Company Tax Return” once your company is registered for Corporation Tax. Filing is required even if you have no tax to pay.

Other taxes your company might owe

There isn’t just one “business tax” in the UK. There’s a whole family of them, and which ones apply to you depends on your structure, your turnover, and what you actually do.

A limited company running a small retail shop might deal with Corporation Tax on its profits, VAT on its sales (once registered), employer’s National Insurance on staff wages, and business rates on the shop premises. Its director might personally pay Income Tax on salary and Dividend Tax on dividends. That’s five or six different taxes, all from one small business.

Depending on what your company does, it may also need to deal with:

• VAT: The tax added to most goods and services. Businesses must register once their taxable turnover passes the VAT registration threshold, currently £90,000, within a rolling 12-month period. After that, they charge VAT on sales and can reclaim VAT on eligible purchases. VAT returns are usually due 1 month and 7 days after each quarter-end.
• Employer’s National Insurance: If your company employs staff, including you as a director on a salary.
• Business rates: A local tax on most non-domestic properties, such as shops, offices and warehouses, based on the property’s rateable value. Some small businesses qualify for relief that reduces or eliminates this.
• Chargeable gains: If your company sells a business asset that’s gone up in value, such as property or shares, the gain is taxed as part of its Corporation Tax bill. Companies don’t pay Capital Gains Tax. But if you personally sell shares in your company, you may pay Capital Gains Tax.
• Stamp taxes: Stamp Duty is paid when buying shares. When buying property, it’s Stamp Duty Land Tax in England and Northern Ireland, Land and Buildings Transaction Tax in Scotland, and Land Transaction Tax in Wales.
• Dividend Tax: Paid personally by shareholders, including director-shareholders, on dividend income above the £500 tax-free allowance, at rates depending on your Income Tax band.
• Income Tax: Paid by employees, including company directors, on salary through PAYE. (Sole traders and partners pay it on their business profits through Self-Assessment.)

Director’s Self-Assessment

Being a company director does not, by itself, automatically require you to register for Self-Assessment. What actually triggers the requirement is your income, not your job title. Your first £500 of dividends each tax year is tax-free. You only pay Dividend Tax on anything above that.

You generally need to file a Self-Assessment return if, for example:

• You receive dividends over £10,000 in a tax year (below that, if you’re over your allowance, HMRC can often collect the tax through your tax code instead)
• You have other untaxed income HMRC doesn’t already know about
• Your income (or your partner’s) is affected by the High-Income Child Benefit Charge
• HMRC has specifically asked you to file one

If your only income is a PAYE salary already taxed at source, and you have no other untaxed income, you may not need to register at all. But this depends entirely on your specific circumstances, so it’s worth checking directly with HMRC or an accountant rather than assuming.

Allowances and reliefs

A limited company may be able to claim allowances and reliefs to reduce its tax bill. What a business can claim depends on the nature of the business and its assets. Anything you or your employees get personal use from must be treated as a benefit.

Capital allowances can be claimed on assets such as equipment, machinery and business vehicles, as long as they’re bought to be used in your business. Note that cars have different rules from vans and other equipment, and don’t qualify for the Annual Investment Allowance.

Other reliefs you could claim include:

• Research and Development (R&D) relief: For innovative projects in science and technology
• Patent Box: A lower rate of tax on profits from patented inventions
• Creative industries expenditure credits: For companies making theatre, film, television, animation or video games
• Relief on goodwill and intangible assets: Such as customer relationships and unregistered trademarks, when buying a business with qualifying intellectual property
• Loss reliefs: Including trading losses, terminal losses, capital losses and property income losses

What this means to you

Not every business pays every tax on this list. It depends on your structure and size. But knowing the full landscape means fewer surprises, and it’s exactly why most growing businesses bring in a qualified accountant rather than tracking all of this manually.

Disclaimer

Please note that this article is for general information only, not personalised legal, financial or tax advice. Speak to a qualified accountant, solicitor or tax adviser about your specific situation. The cost of professional advice is small compared to the cost of your time, stress, and potential penalties.