--- title: Corporation Tax in the UK – Updated 2026 Guide description: Corporation Tax is complicated - this essential guide will tell you all about the fundamentals of corporation tax, and answer plenty of FAQs along the way. image: https://blog.shorts.uk.com/hubfs/Corporation%20Tax%20UK%202024%20header.jpg --- [![Shorts_logo_White](https://blog.shorts.uk.com/hubfs/New%20Site%202018/Shorts_logo_White.svg "Shorts_logo_White")](https://www.shorts.uk.com/) [Blogs & News](https://blog.shorts.uk.com/) > [Corporation Tax](https://blog.shorts.uk.com/topic/corporation-tax) # Corporation Tax in the UK – Updated 2026 Guide David Robinson - 31 March 2026 ###### Select topic - Please Select - [ Audit ](https://blog.shorts.uk.com/topic/audit) [ Business Taxes ](https://blog.shorts.uk.com/topic/business-taxes) [ Radius – R&D Tax Relief & Patent Box ](https://blog.shorts.uk.com/topic/radius-rd-tax-relief-patent-box) [ Corporate Finance ](https://blog.shorts.uk.com/topic/corporate-finance) [ GENUS Management Accounts ](https://blog.shorts.uk.com/topic/genus-management-accounts) [ VAT ](https://blog.shorts.uk.com/topic/vat) [ Private Client ](https://blog.shorts.uk.com/topic/private-client) [ Payroll ](https://blog.shorts.uk.com/topic/payroll) [ EOT ](https://blog.shorts.uk.com/topic/eot) [ International Taxes ](https://blog.shorts.uk.com/topic/international-taxes) ![featured image](https://blog.shorts.uk.com/hubfs/Corporation%20Tax%20UK%202024%20header.jpg) Corporation Tax, also known as corporate tax, is complex and has undergone multiple reforms by various governments over the years. It is crucial to understand how corporation tax works and how it impacts you and your business. To help with this, we have created an introductory guide to Corporation Tax, covering everything you need to know. ## What is the UK Corporation Tax rate? - **Corporate Tax Rate: 25% ** Corporation Tax in the UK is a corporate tax levied on the annual profits of UK resident companies and branches of overseas companies. The current UK Corporation Tax rate is 25% for all limited companies. Up until April 2023, the previous Corporation Tax main rate was 19%. ### Who pays Corporation Tax? All taxable UK limited companies must pay Corporation Tax on their annual profits, but Corporation Tax liabilities can also extend to unincorporated organisations like: - co-operatives - trade and housing associations - members clubs or associations ### Corporate Tax thresholds The 25% main rate is payable by companies with taxable profits above £250,000. A small profits rate (SPR) applies for companies with profits of £50,000 or below, meaning they will pay 19%. Companies with taxable profits between £50,000 and £250,000 pay the main rate reduced by marginal relief, which provides a gradual increase in the average Corporation Tax rate. See below. | Year to 31st March 2025 | Profits band £ | Corporation Tax rate % | | --- | --- | --- | | Small profits rate | 0 - 50,000 | 19% | | Main rate | Over 250,000 | 25% | ### Marginal Relief for Corporation Tax Companies may [reduce their Corporation Tax bill](https://blog.shorts.uk.com/how-to-reduce-corporation-tax-15-top-tips) through the Marginal Relief scheme if their profits are less than £250,000. - Lower limit: £50,000 - Upper limit: £250,000 Marginal Relief results in a tax rate that gradually increases between the small business rate and the main Corporation Tax rate. This allows qualifying businesses to pay a lower tax rate than the standard 25% rate. ### Who is ultimately responsible for paying Corporation Tax to the government? The company director, or directors, are responsible for filing Corporation Tax returns with HMRC and paying all taxes by the appropriate deadline. Many companies hire tax specialist accountants to prepare Corporation Tax returns, but the legal responsibility still lies with the company directors. ### How is Corporation Tax paid? Corporate Tax can be paid electronically, at a bank, or at a post office. The Corporation Tax bill can be paid by CHAPS, online, or over the telephone if same-day payment is required. BACS transfers, direct debits, and credit or debit card payments usually take approximately three working days. For full instructions on how to pay your corporation tax, consult the [UK Government website](https://www.gov.uk/pay-corporation-tax). ## When is the Corporation Tax deadline? The UK **Corporate Tax return deadline** is usually 12 months after the end of the accounting period the return covers. Please remember that the deadline for paying a Corporation Tax bill is typically 9 months and one day after the accounting period ends. It's important to note that large companies may need to make Corporation Tax payments in instalments, with some of these payments due during the accounting year rather than after it. ### Penalties for missing the Corporation Tax return filing deadline The following penalties apply when Corporation Tax returns are filed late: | **Time after your deadline** | **Penalty** | | --- | --- | | 1 day | £100 | | more than 3 months | Another £100 | | more than 6 months | A 10% penalty on top of your unpaid Corporation Tax | | more than 12 months | An additional 10% of any unpaid Corporation Tax | In addition, if your Corporation Tax return is late 3 times in a row, the £100 penalties are increased to **£500**. More information on Corporation Tax penalties can be found on the [UK Government website.](https://www.gov.uk/guidance/corporation-tax-penalties) ### Penalties for late Corporation Tax payment If you are unable to pay a company’s Corporation Tax bill on time, the company will be charged interest on the balance outstanding. If payments are not made, HMRC may pursue one of several courses of action to ensure the outstanding Corporation Tax is paid. These include: - Contacting debt collection agencies - Recovering the money directly from your bank or building society account - Selling your assets - Initiating court proceedings - Liquidating the company and closing your business down It is critical that outstanding Corporation Tax is paid on time, as the consequences of not paying can be severe— they may even put your business in jeopardy. ### Assistance with paying a Corporate Tax bill If you are unable to pay your outstanding Corporation Tax, HMRC may be able to help by setting up a payment plan. They must be contacted as soon as possible, not after deadlines have passed. Note that large companies that are required to pay by instalments can incur a penalty if payments are not made on time. ## What happens if you submit inaccurate information with your Corporation Tax return? Submitting a Corporation Tax return with inaccurate information can cause all manner of issues, starting with an assortment of potential fines. There are different ways in which HMRC perceives errors, and penalties will vary depending on the severity of the inaccuracy, whether the inaccuracy was deliberate, and whether you attempted to conceal it. - **Accidental errors** in your Corporate Tax return, if disclosed to HMRC, will result in a fine between 0-30% of your total Corporation Tax bill. If you fail to disclose the error and HMRC discovers it, this fine will be a **minimum of 15%.** - **Deliberate, unconcealed inaccuracies** in your Corporate Tax return, if disclosed to HMRC, will result in a fine between **20-70%**. Undisclosed inaccuracies of this type will result in a fine of **35-70%** if discovered by HMRC. - **Deliberately concealed inaccuracies** are much more serious and will result in a fine between **30-100%** of your total Corporation Tax bill if you disclose the inaccuracy to HMRC. If you attempt to hide this and HMRC discovers it, your fine will be between** 50-100%.** - **Inaccuracies relating to offshore issues** may incur even higher penalties. It is critically important that your Corporation Tax returns are completed with attention to detail and a clear understanding of the information being submitted. [Business tax accountants](https://www.shorts.uk.com/business-taxes/) can help ensure your Corporation Tax returns are completed accurately and error-free. ## UK Corporation Tax rate history The Corporation Tax rate in the UK has overall reduced since 2010. In 2010, Corporate Tax was set at 28%, with significant reductions taking place in the following few years. After 2014, the rate of reduction slowed down, and from 2017 to April 2023, the rate was 19%. Since April 2023 the Corporation Tax main rate is 25%. ### **Corporation tax main rate in the UK (2006-2026)** ![Line graph showing the changing corporation tax UK rates over the last decade](https://blog.shorts.uk.com/hs-fs/hubfs/Screenshot%202024-03-25%20115948.png?width=842&height=493&name=Screenshot%202024-03-25%20115948.png)   ### What is Ring Fence Corporation Tax? [Ring Fence Corporation Tax](https://blog.shorts.uk.com/tax-efficient-ring-fence-property-assets-companies) (RFCT) is like Corporate Tax, except it is only paid by companies involved in the production of oil and gas in the UK, as well as the UK Continental Shelf (which includes parts of the North Sea, the North Atlantic Ocean, the Irish Sea, and the English Channel). **The Ring Fence Corporation Tax main rate is 30% and there is also a small profits rate of 19%. ** ## Do you have to pay Corporation Tax on dividends? Dividends are payments a company makes to shareholders when it has made a profit. Companies do not need to pay Corporation Tax on dividends they receive; however, if an individual shareholder received dividends greater than £1,000 before 6 April 2024, they will need to pay [Income Tax](https://blog.shorts.uk.com/income-tax-allowances-2024/25) on this. This tax-free amount reduced to £500 in April 2024. ### Are dividends deductible from Corporation Tax? Paying out dividends will not reduce your Corporation Tax bill. Corporation Tax is paid on a company’s profits before any dividends are paid out. This means a dividend is not a tax-deductible expense and therefore does not lower the profits of a company, nor does it appear on the company’s income statement. ### Do sole traders pay Corporation Tax? Sole traders do not pay Corporation Tax; instead, they are required to pay Income Tax on their business profits via self-assessment. ## How do you pay less Corporation Tax in the UK? There are many opportunities where companies can ensure they are paying **only** their fair share of Corporation Tax. Through careful and detailed tax planning, you can [minimise your Corporation Tax bills](https://blog.shorts.uk.com/how-to-reduce-corporation-tax-15-top-tips), while enjoying tax efficiency in several other areas, including: - Tax relief on property and equipment through capital allowance claims - [Tax relief for innovative companies](https://blog.shorts.uk.com/updates-to-tax-reliefs-for-innovative-companies-in-the-uk-for-2025) through R&D tax credits - [Patent box tax relief](https://www.shorts.uk.com/rd-tax-reliefs/patentbox/) - Much more… Shorts Chartered Accountants has a team of experienced tax advisers, the biggest in the region. We offer strategic advice that can turn business tax planning into an opportunity, not an endurance test. If you would like to discuss your options with one of our dedicated business tax experts, get in touch with our [Business Tax team](https://shorts.uk.com/business-taxes/corporation-tax/) today.  [![The Shorts Tax Saving Guide - Over 70 Tax Planning Tips](https://no-cache.hubspot.com/cta/default/2442072/interactive-172822237526.png) ](https://blog.shorts.uk.com/hs/cta/wi/redirect?encryptedPayload=AVxigLLFTqKNB1Ep3SOGtiQ7lCHwvyrDm%2FTXJxBJEi9%2BwnuL3KCMTUYR%2Bfd8DEqNjECbSTaUgyCTiw5%2BoBQ4iildYNQEYo31gq4TSCkMHamPqTLz8sDWfw8Wh8M2zYxz04eut87BuvA3d1lqaLIDxS8jXAP%2FH8mHPIUKaBwPp3p2vhRVwD06imdX49DxZuEEijnA8f7uQzIEeg%3D%3D&webInteractiveContentId=172822237526&portalId=2442072)   ![author](https://blog.shorts.uk.com/hubfs/Team%20profile%20round%20images/David%20Robinson%20Round%20circle.jpg) #### David Robinson As a Tax Partner, I advise clients on all aspects of UK tax, ranging from business taxes, transactions and private client matters, helping to achieve the objectives and aspirations of businesses and their owners. [View my articles](https://blog.shorts.uk.com/author/david-robinson) Tags: [Corporation Tax](https://blog.shorts.uk.com/topic/corporation-tax) Share this on - - - [Questions? Get in touch with us](https://www.shorts.uk.com/contact/) ###### Tax Saving Guide 2026-27 Written especially for entrepreneurs and owner-managed businesses, this guide is full of planning ideas and tax risks to avoid. [ Download now ](https://info.shorts.uk.com/en-gb/tax-saving-guide) ![Tax saving guide 2026-27](https://blog.shorts.uk.com/hs-fs/hubfs/Tax%20saving%20guide%202024.jpg?width=375&height=465&name=Tax%20saving%20guide%202024.jpg) ###### Related articles ##### [Corporation Tax rate will be 25% from 1 April 2023](https://blog.shorts.uk.com/corporation-tax-rate-will-be-25-from-1-april-2023) ##### [What is the Patent Box - How does it work?](https://blog.shorts.uk.com/hmrc-patent-box-scheme) ##### [Patent Box for SMEs – Reduce Corporation Tax](https://blog.shorts.uk.com/patent-box-for-smes-reduce-corporation-tax) ##### [13 proven ways to reduce Corporation Tax – Updated for 2024/25](https://blog.shorts.uk.com/how-to-reduce-corporation-tax-15-top-tips) ###### Latest articles [How to separate a business through a demerger](https://blog.shorts.uk.com/how-to-separate-a-business-through-a-demerger) [A case of aggressive tax avoidance: Glasgow Rangers Football Club](https://blog.shorts.uk.com/aggressive-tax-avoidance-affect-you) [What is VAT? - Complete Guide (Updated for 2025/26)](https://blog.shorts.uk.com/what-is-vat) [Ashgate Hospice Sparkle Night Walk 2026](https://blog.shorts.uk.com/ashgate-hospice-sparkle-night-walk-2026) [Stocktaking guide for UK businesses](https://blog.shorts.uk.com/stocktaking-guide-for-uk-businesses) [Supporting the Chatsworth Cascade for future generations](https://blog.shorts.uk.com/supporting-the-chatsworth-cascade-for-future-generations) [Deal of the Year win at Insider Dealmakers Awards 2026](https://blog.shorts.uk.com/deal-of-the-year-win-at-insider-dealmakers-awards-2026) [Football shirt Wednesday: Backing England in style](https://blog.shorts.uk.com/football-shirt-wednesday-backing-england-in-style) [Understanding lifetime trusts: the basics](https://blog.shorts.uk.com/understanding-lifetime-trusts-the-basics) [Close company directors face new HMRC detail requirements in 2026](https://blog.shorts.uk.com/close-company-directors-face-new-hmrc-detail-requirements-in-2026) #### About Us Use this little footer to reinforce your message about who you are and why people love working with you. 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