| Main rate | 25 percent on profits over £250,000 |
| Small profits rate | 19 percent up to £50,000 |
| In between | marginal relief (sliding scale) |
| Payment | 9 months and 1 day after the end of the accounting period, large profits in instalments |
| Return | 12 months after the end of the accounting period |
Who pays corporation tax in the UK
Corporation tax is paid by UK companies, but also by foreign companies with a branch or office in the UK. The difference is scope. A UK resident company is taxed in the UK on its worldwide profit. A foreign company with only a UK branch is taxed there only on the profit of its UK activity.
A company incorporated in the UK is UK resident. For owners abroad there is a second half: if the company is in truth run from home, your home country may treat it as resident too. The treaties then look to where the company is effectively managed, or leave it to the tax authorities to agree; see the UK's tax treaties. How to set this up properly at formation is under UK company formation.
The rates at a glance
The limits apply to a full accounting period and a company without associated companies.
| Taxable profit | Rate |
|---|---|
| up to £50,000 | 19 percent (small profits rate) |
| £50,000 to £250,000 | 25 percent, reduced by marginal relief |
| over £250,000 | 25 percent (main rate) |
GOV.UK: Corporation Tax rates, expenses and reliefs
The associated companies trap
The £50,000 and £250,000 limits sound generous. But they are divided by the number of associated companies and reduced pro rata for short accounting periods. If you control two other companies besides the UK one, abroad too, the 19 percent limit can shrink to a fraction.
This is exactly where many founders from abroad get it wrong: they compare the 19 percent with their rate at home and overlook that their company at home, their holding and their shareholdings can count. Whether and how your companies are associated belongs in the planning before you incorporate.
The first year has another quirk: there can be two accounting periods for tax, each with its own payment and return. Your deadline calendar shows it.
No assessment, but deadlines
In the UK no company receives a corporation tax assessment. It calculates its own tax, files the CT600 return and pays on time. Payment is due 9 months and 1 day after the end of the accounting period, the return 12 months after. So payment comes before the return, a detail that regularly surprises founders from abroad.
Companies with taxable profits over £1.5 million pay in instalments during the year. And even a company with a loss or nothing to pay files a return.
What is deductible and what is not
The basic rules. What is deductible in detail depends on the business and the type of expense.
- Running business expenses incurred wholly for the business reduce the profit.
- Investment is not deductible directly; for plant and machinery there are capital allowances instead.
- Entertaining customers is expressly not deductible.
- Dividends to shareholders do not reduce the profit; they are paid out of taxed profit.
The government sticks to its roadmap and caps the main rate at 25 percent. Full expensing stays. Announced: the first-year allowance in the main pool rises from 40 to 50 percent for expenditure from 1 January 2027, and the main pool writing-down allowance falls to 12 percent from 1 April 2027. For banks the surcharge rises temporarily from 3 to 6 percent. The changes come with the Finance Bill 2026-27.
And how does the profit reach you?
Corporation tax is only the first layer. If the company pays dividends, the UK withholds no tax on them. How that works, and what applies at home, is in our piece on UK dividend withholding tax.
If you live in the UK yourself, you pay UK income tax on dividends: in 2026/27 the first £500 is free, then 10.75, 35.75 or 39.35 percent depending on your band. The mix of salary and dividend is in salary or dividend. If you want to pool your shareholdings, the structure for it is the UK holding company.
Frequently asked questions
How high is corporation tax in the UK?
25 percent on profits over £250,000, 19 percent on profits up to £50,000, with a sliding rate in between through marginal relief. The limits fall with the number of associated companies.
Does my UK branch pay corporation tax too?
Yes, on the profit of its UK activity. The comparison between branch and subsidiary is in branch or subsidiary.
Does my company have to file a return even without profit?
Yes. The return is due even with a loss or no tax.
Sources: GOV.UK: Corporation Tax rates, expenses and reliefs; GOV.UK: Corporation Tax; GOV.UK: Pay your Corporation Tax bill; GOV.UK: Company Tax Returns; GOV.UK: Tax on dividends; GOV.UK: Budget 2026
