Corporation Tax
What is Corporation Tax?
Corporation tax is payable on the profits of limited companies and certain other organisations, such as co-operatives, clubs and associations.
Corporation tax is chargeable on:
- trading profits (income from business activities),
- capital gains (profits from selling assets such as property or shares), and
- investment income (interest earned on investments and savings).
What are the Rates of Corporation Tax?
Effective from 1st April 2023, the rates of corporation tax are:
- Small Profits Rate: 19% (applied to profits up to £50,000)
- Marginal Rate: 26.5% (applied to profits between £50,001 and £250,000)
- Main Rate: 25% (applied to profits over £250,000)
If profits fall between £50,000 and £250,000 'Marginal Relief' is applied to reduce the 25% corporation tax charge.
What is a CT600?
A CT600 is the corporation tax return that must be submitted to HMRC to report profits and calculate corporation tax liabilities.
The return includes details of income, expenses, tax adjustments, capital allowances and any tax relief claimed. The return must be filed annually, even if the company has no tax to pay or has made a loss.
The CT600 must be filed alongside statutory accounts and a tax computation explaining how the tax has been calculated.