Limited companies pay Corporation Tax on their profits: 19% where profits are £50,000 or less, 25% above £250,000, and a tapered effective rate in between produced by marginal relief (the marginal slice between the limits is effectively taxed at 26.5%). The limits are shared between associated companies.
Payment is due nine months and one day after the accounting year ends, before the return itself. For owner-directors, Corporation Tax is only half the picture: profit taken out as dividends is taxed again personally, so the salary, dividend and pension mix deserves real planning. Model it with the Corporation Tax Calculator.
A company with £80,000 of profit pays the 25% main rate minus marginal relief of £2,550 (3/200 of the gap up to £250,000), landing at £17,450, an effective 21.8%. The relief tapers away smoothly, but the profit slice between £50,000 and £250,000 is effectively taxed at 26.5%, worth knowing before accelerating income into a marginal-relief year.
