Corporation Tax: What Your UK Company Needs to Know

If your UK limited company is active—meaning it’s trading, investing, or earning income—it must pay Corporation Tax on its profits. Unlike VAT or PAYE, there is no threshold: registration is mandatory for every active company.

In this article, we explain what Corporation Tax is, when to register, and how Dragonfly Associates can help you manage your tax obligations, subject to agreement.

What Is Corporation Tax?

Corporation Tax is a direct tax that UK companies pay on their taxable profits. This includes:

• Trading income
• Investment income (e.g. interest, dividends)
• Capital gains from asset sales

The current Corporation Tax rate (as of 2025) is 25% for profits over £250,000. Small companies with profits under £50,000 pay a lower marginal rate. There is a tapered rate in between.

These rates can change annually, so it’s important to stay informed or work with a provider who keeps you compliant.

Who Needs to Register?

You must register for Corporation Tax if your company is:

• Actively trading (selling goods or services)
• Receiving investment or bank interest
• Employing people or paying yourself as a director
• Involved in any other activity that generates income

Even if your company is not making a profit, you still need to file a Corporation Tax return if the company is active.

Dragonfly Associates registers clients for Corporation Tax as part of our company formation and accounting packages, where applicable.

When and How to Register

You must register with HMRC within 3 months of starting to trade. “Trading” includes invoicing, advertising, receiving payments, or buying stock.

Registration is done online via the HMRC portal. Once registered, HMRC will:

• Issue a Unique Taxpayer Reference (UTR)
• Create a company tax record
• Set your deadlines for returns and payments

We handle registration and setup for clients enrolled in our tax and compliance support plans.

Key Corporation Tax Deadlines

• Register within 3 months of starting business
• File your Corporation Tax return (CT600) within 12 months of year-end
• Pay any Corporation Tax due within 9 months and 1 day after your accounting period ends

Missing deadlines can result in penalties and interest charges. Dragonfly Associates monitors these dates for our clients, where agreed.

What Does a Corporation Tax Return Include?

Your tax return must show:

• Company details and accounting period
• Calculated taxable profits
• Tax adjustments (e.g., disallowed expenses, capital allowances)
• Final Corporation Tax liability

It must be filed online in iXBRL format and usually submitted alongside your annual accounts.

We prepare and submit Corporation Tax returns for clients using our accounting services, depending on their service plan.

Allowable Expenses and Reliefs

To reduce your tax liability, your company can deduct allowable business expenses, such as:

• Staff salaries and employer NI
• Office rent and utilities
• Marketing and advertising costs
• Professional services and subscriptions
• Travel and business-related expenses

You may also qualify for reliefs like:

• R&D tax credits
• Capital allowances
• Loss carry-forward

Dragonfly Associates provides guidance on allowable expenses and ensures they’re recorded properly, subject to agreement.

Frequently Asked Questions

Can I file my own Corporation Tax return?

Yes, but many business owners prefer professional assistance to ensure accuracy and avoid penalties.

Do dormant companies pay Corporation Tax?

No. But you must inform HMRC that your company is dormant. Otherwise, you may still receive filing requests.

What happens if I don’t register?

HMRC may fine your company and backdate tax liabilities. You could also face late payment penalties.

Manage Your Tax with Confidence

Corporation Tax is one of the most important obligations your company will face. With clear processes, good recordkeeping, and proactive support, it doesn’t have to be a burden.

Dragonfly Associates helps businesses register, file, and manage their Corporation Tax duties with clarity and care—available under contract and according to your selected service level.

To ensure your company meets its tax obligations from day one, get in touch with our team.