Small Business Tax Dictionary
Corporation Tax
Corporation Tax is a tax in the United Kingdom on the profits of limited companies and some other organisations, such as clubs and societies.
What is Corporation Tax?
Corporation Tax is calculated on a company's taxable profits, which includes:
- Trading profits — income from the company's primary business activities
- Investment income — returns from investments and assets held by the company
- Capital gains — profit from the sale of company assets
Why it matters
Understanding and complying with Corporation Tax is vital for UK businesses. Proper management supports:
- Business integrity and financial accuracy
- Compliance with UK tax law
- Responsible corporate citizenship
- Sound financial planning and reporting
Rates and filing
The rate of Corporation Tax and the rules around allowable deductions can change with each UK Budget. Companies must file a Company Tax Return with HMRC, usually within 12 months of the end of their accounting period, and pay any tax owed within 9 months and one day of the period end.