UK Corporation Tax is payable 9 months and 1 day after the end of the company''s accounting period — earlier than the filing deadline of 12 months. This catches out a lot of first-time directors who assume "the tax is due when the return is due". It''s not. Payment first, return later.

The main rate of Corporation Tax is 25% on profits over £250,000. A small profits rate of 19% applies to profits up to £50,000. Between the two, marginal relief tapers the effective rate from 19% to 25%.

What you pay tax on

Corporation Tax is charged on taxable profits — accounting profit adjusted for tax purposes. Adjustments include:

• Add back disallowable expenses — things shown in the accounts that HMRC doesn''t accept (most client entertaining, depreciation, fines, some legal fees).
• Subtract capital allowances — tax-deductible relief on equipment, machinery, and certain other capital assets in place of accounting depreciation.
• Add back specific items — director loans treated as remuneration, certain interest restrictions.
• Subtract losses carried forward from prior years (subject to restrictions for groups and larger losses).

The rate bands

For accounting periods in 2026:

• Profits up to £50,000: 19% (small profits rate).
• Profits £50,001-£250,000: 25% with marginal relief, giving an effective rate that rises smoothly from 19% to 25% across the band.
• Profits over £250,000: 25% (main rate).

If your company is in a group, the £50,000 and £250,000 thresholds are divided by the number of associated companies. A solo company in a 5-company group has the small profits rate applying only on the first £10,000 of profit — much narrower than it looks.

The deadlines

Two distinct deadlines apply, and they aren''t the same date:

• Pay the tax: 9 months and 1 day after the accounting period end.
• File the CT600 return: 12 months after the accounting period end.

For a company with a year-end of 31 March 2026:

• Tax due 1 January 2027.
• CT600 due 31 March 2027.

Larger companies — those with taxable profits exceeding £1.5 million (divided by associated companies) — pay in quarterly instalments instead, starting 6 months and 14 days into the accounting period. Very large companies (over £20 million in profits) pay earlier still.

Capital allowances — where most of the planning happens

Capital allowances are the tax equivalent of depreciation. The main mechanisms are:

• Annual Investment Allowance (AIA): 100% first-year deduction on most plant and machinery up to £1 million per year. This is generous and used by most SMEs.
• Full expensing: 100% deduction on qualifying new plant and machinery (introduced 2023, made permanent 2024). Applies to companies, not unincorporated businesses.
• Special rate pool: 6% reducing balance on integral features and long-life assets, where AIA isn''t used.
• Structures and Buildings Allowance: 3% per year on construction costs of new commercial buildings.

If you spend significantly on equipment, vehicles, or fit-out, get the capital allowances right — it can move the tax bill substantially. An accountant''s "capital allowances review" before year-end is one of the highest-leverage Corporation Tax planning steps.

R&D tax relief

If your company has done genuine technical or scientific work to overcome uncertainty in your field, you may qualify for R&D tax relief. The rules changed significantly in April 2024 — the previous SME and RDEC schemes merged into a single Research and Development Expenditure Credit (RDEC) for most claims, with an Enhanced R&D Intensive Support (ERIS) scheme for loss-making R&D-intensive SMEs.

Claims must be made within two years of the accounting period end. They require a written technical narrative explaining the qualifying work, plus a cost breakdown. HMRC has tightened enforcement substantially since 2023 — speculative or vague claims are being rejected or investigated.

What to do next

• Get your year-end planning conversation booked at least 2 months before the period end. By the time the period closes, most of the levers (capital purchases, pension contributions, salary/dividend mix) have already played out.
• Forecast the tax bill in month 8 of the accounting period so you''re not surprised by the payment date.
• Pay early if you can. HMRC pays interest on early Corporation Tax payments (currently around 4% — far better than most current accounts).