Corporation tax rates for 2026/27
Corporation tax is charged on a company's taxable profits. Companies with profits of £50,000 or less pay the small profits rate of 19%. Those with profits over £250,000 pay the main rate of 25%. Between the two, marginal relief applies. It brings the overall rate up gradually, which means profits inside that band are effectively taxed at 26.5%, higher than the main rate.
Those limits are not fixed for every company. They are divided between associated companies, which broadly means companies under common control, and they are reduced for accounting periods shorter than 12 months. A director who owns two companies may find each one has much lower limits than expected. We check this every year.
When corporation tax is due
For most small and medium companies, corporation tax must be paid 9 months and 1 day after the end of the accounting period. The CT600 return itself is due 12 months after the end of the period, so the payment deadline comes first. That trips up a lot of new directors.
A newly formed company must tell HMRC that it has started trading within 3 months. Large companies pay in instalments during the year rather than in one sum. Late payment brings interest, and a late return brings penalties that rise the longer it is outstanding. A company must file a return even when it has made a loss.
What is included
- Corporation tax calculation from your accounts
- CT600 return prepared and filed with HMRC
- Capital allowances and full expensing claims
- Associated company and marginal relief checks
- Loss relief claims
- Director's loan account review
- Payment reminders and deadline tracking
- Year end tax planning meeting
Reliefs and allowances worth checking
A good part of a corporation tax accountant's work in Watford is making sure the company claims everything it is entitled to. The most common items are capital allowances, which give tax relief on equipment and other assets in place of depreciation.
- The Annual Investment Allowance, which covers up to £1 million of qualifying plant and machinery each year, but not cars
- Full expensing for companies on new plant and machinery
- Car allowances, which depend on the car's CO2 emissions
- Research and development relief under the merged scheme, for accounting periods starting on or after 1/4/2024
- Trading losses set against other profits, carried forward or carried back
Using losses in the right year
A difficult year does not have to be wasted. A trading loss can usually be set against the company's other profits in the same period. It can also be carried back against profits of the previous 12 months, as long as the company was carrying on the same trade, which may produce a refund of tax already paid. Any loss not used that way can be carried forward against future profits.
The claim normally has to be made within 2 years of the end of the period in which the loss arose. We look at which option gives the best result, rather than defaulting to carrying everything forward.
How your corporation tax accountant in Watford prepares the return
We work from your year end accounts. Accounting profit is not the same as taxable profit, so we adjust it. Depreciation is added back and replaced with capital allowances. Business entertaining is taken out because it cannot be deducted. Any items that are partly private are reviewed.
The finished CT600 is filed online with your accounts in iXBRL, the tagged format HMRC requires. You receive a summary showing the tax due, the payment date and how to pay. If the company has an overdrawn director's loan account that will not be repaid within 9 months of the year end, we show the temporary tax charge on the return too and explain how to avoid it.
Clients from Rickmansworth, St Albans and Harrow work with us in the same way as those in Watford, sending records online and talking by email or video. A meeting at our Watford office can be arranged when it helps.
Planning before the year end, not after
The best time to think about corporation tax is a couple of months before your company's year end. At that point there is still time to bring forward a planned equipment purchase, decide on pension contributions for directors, or look at the mix of salary and dividends. After the year end, the numbers are largely fixed.
We also look at timing across the group if you run more than one company, since associated companies share the rate limits. Planning does not mean taking risks. It means making informed choices within the rules while there is still time to make them.
A short review with your corporation tax accountant in Watford a few weeks before the year end is usually enough. We look at the profit so far, estimate the tax, and tell you how much to set aside so the payment does not strain cash flow when it falls due.
Who this suits
- Owner managed limited companies
- Directors with more than one company
- Companies investing in equipment or vehicles
- Businesses that made a loss and want to use it
- Newly formed companies filing for the first time
- Consultants and contractors trading through a company
Common questions
What is the corporation tax rate for a small company?
Companies with profits of £50,000 or less pay 19%. The main rate of 25% applies above £250,000, with marginal relief in between. These limits are shared between associated companies.
When do I have to pay my company's corporation tax?
Most small companies must pay 9 months and 1 day after the end of the accounting period. The return is due later, at 12 months, but the payment deadline does not move.
My company made a loss. Do I still file a CT600?
Yes. Every company that receives a notice to file must send a return, even with a loss. Filing also records the loss so it can be used against other profits.
Can a loss this year get me a refund of last year's tax?
Often, yes. A trading loss can be carried back against the previous 12 months of profit if the company carried on the same trade, which can lead to a refund. The claim usually has to be made within 2 years.
Can my company claim for a car?
Cars do not qualify for the Annual Investment Allowance. Instead, capital allowances on cars depend on CO2 emissions. Private use may also create a taxable benefit for the director.
What makes two companies associated?
Broadly, companies are associated when one controls the other or both are under the control of the same person or group. When that happens, the profit limits for the 19% and 25% rates are divided between them.
What happens if corporation tax is paid late?
HMRC can charge interest on tax that is paid late. If the return is also late, penalties are added and rise over time. Setting money aside during the year helps avoid both.