Who pays Corporation Tax
Who this guide is for: For limited company owners who need to understand taxable company profit, rates and deadlines — before modelling personal extraction.
UK limited companies pay Corporation Tax on taxable profits for each accounting period. It is a company liability, not a PAYE deduction from directors' salaries.
- Step 1Company profit
- Step 2Salary & employer costs
Separate company cost branches
- Branch AEmployer National Insurance
- Branch BEmployer pension
- Step 3Corporation Tax (highlighted in this guide)
- Step 4Post-tax reserves
- Step 5Dividends
- Step 6Personal tax
- Step 7Take-home cash
Employer National Insurance and employer pension contributions usually reduce taxable company profit before Corporation Tax. Dividends come later, from post-tax distributable reserves, and personal tax is calculated on what the director receives.
How taxable company profit is built
Start from trading profit (and other chargeable profits), then adjust for items such as:
- Director or employee salary (usually deductible)
- Employer National Insurance on that pay
- Employer pension contributions where they meet the deductibility rules — see Employer Pension Contributions Explained
- Disallowable expenses added back
- Capital allowances instead of accounting depreciation
Rates in Northline's 2026/27 director overlay
| Band | Taxable / augmented profits | Rate |
|---|---|---|
| Small profits rate | Up to £50,000.00 | 19% |
| Marginal relief | £50,000.00 to £250,000.00 | Between 19% and 25% |
| Main rate | Over £250,000.00 | 25% |
Associated companies
Broadly, companies can be associated where the same person or persons control them, and commercial interdependence can also matter. The legal test is detailed — treat the notes below as a planning overview, not a full legal assessment.
For the rate limits, the divisor is the number of associated companies including the company itself — that is, other associated companies plus one.
| Other associated companies | Divisor | Lower limit | Upper limit |
|---|---|---|---|
| 0 | 1 | £50,000.00 | £250,000.00 |
| 1 | 2 | £25,000.00 | £125,000.00 |
| 3 | 4 | £12,500.00 | £62,500.00 |
Augmented profits are taxable total profits plus certain exempt distributions received. Rate banding uses augmented profits; the tax itself is charged on taxable profits (with marginal relief calculated from the rules above).
Three different clocks
| Clock | What it is |
|---|---|
| Personal tax year | 6 April to 5 April (for example 2026/27) — used for Income Tax and Dividend Tax. |
| Company accounting period | The period the company prepares accounts for — often 12 months, but can be shorter. |
| Corporation Tax financial year | 1 April to 31 March. Accounting periods that span financial years may need careful rate treatment. |
Worked marginal relief example
£100,000.00 taxable profit — marginal relief
Financial year FY2026 · England · 0 other associated companies · 12-month accounting period · no exempt distributions. Figures from the shared Corporation Tax engine.
| Taxable profit | £100,000.00 |
|---|---|
| Lower profit limit (adjusted) | £50,000.00 |
| Upper profit limit (adjusted) | £250,000.00 |
| Regime | Marginal relief |
| Headline rate before relief | 25% |
| Marginal relief | £2,250.00 |
| Corporation Tax due (key figure) | £22,750.00 |
| Effective rate (key figure) | 22.75% |
If the accounting period straddles a financial-year rate change, Northline may simplify the period — check the calculator warnings for your inputs.
Calculate your Corporation Tax with associated companies and your accounting period Use the Corporation Tax Calculator
Payment and filing deadlines
- Corporation Tax payment — for most companies, nine months and one day after the end of the accounting period. Large companies may pay by instalments.
- Company tax return — normally due 12 months after the end of the accounting period.
Shorter or longer accounting periods change the date arithmetic. Always confirm due dates for your company on GOV.UK.
Where to go next
- Corporation Tax Calculator — estimate post-tax company profit from accounting profit and adjustments.
- Director Salary and Dividends Explained — how extraction sits around Corporation Tax, then the Director Salary & Dividend Calculator.
- Employer Pension Contributions Explained — when company pension payments may reduce taxable profit.
- Limited company tax hub.