Corporation tax overview

What is corporation tax?

Corporation tax is the tax UK limited companies pay on their profits. The main rate (since April 2023) is 25% for companies with profits over £250,000, with marginal relief available for profits between £50,000 and £250,000, and a small profits rate of 19% for profits up to £50,000.

Sole traders and partnerships don’t pay corporation tax — they pay Income Tax and National Insurance through Self Assessment.

Who pays corporation tax?

You must pay corporation tax if you’re:

• A UK resident company (incorporated in the UK or centrally managed and controlled in the UK).
• A foreign company with a UK permanent establishment.
• A UK property business.

Charities and Community Interest Companies may be exempt from corporation tax on some income — contact your accountant for specific advice.

The corporation tax timeline

Event	Deadline
File CT600 (tax return)	12 months after the accounting period end
Pay corporation tax	9 months and 1 day after the accounting period end

Note: Large companies (taxable profits over £1.5 million) must pay quarterly instalments. AccBooks flags this under Corporation tax → Payment schedule if it applies to you.

The payment deadline is earlier than the filing deadline — this catches many businesses out. AccBooks sends payment reminders automatically.

How AccBooks tracks your corporation tax liability

AccBooks maintains a running corporation tax estimate throughout the year, visible on the Corporation tax page. This estimate is based on:

• Your cumulative net profit for the period
• Any capital allowances claimed on fixed asset additions
• Any carried-forward losses from prior years

The estimate updates in real time as you post transactions and add fixed assets.

Adjusting profit for tax purposes

Your tax profit (the figure you pay corporation tax on) differs from your accounting profit. Common adjustments include:

Adjustment	Direction
Depreciation (add back)	+ve (accounting charge, not deductible)
Capital allowances (deduct)	-ve (tax-deductible substitute for depreciation)
Client entertaining (add back)	+ve (never deductible)
Capital gains	May be added
R&D relief	-ve (if qualifying)

AccBooks tracks all adjustments under Corporation tax → Tax adjustments. Most are populated automatically — depreciation is added back and capital allowances are deducted based on your fixed asset register.

CT600 preparation

When your accounting period ends, AccBooks generates a draft CT600 computation:

1. Go to Corporation tax → CT600 preparation.
2. Review the profit figure and tax adjustments.
3. Enter any additional adjustments (R&D claims, group relief, etc.).
4. AccBooks calculates the tax liability, marginal relief (if applicable) and any instalments due.
5. Download the iXBRL-tagged CT600 for submission, or pass it to your tax agent.

See CT600 preparation for a detailed walkthrough.

Associated companies rule

If you control or are controlled by other companies, HMRC considers you “associated” for the purpose of the marginal relief limits. If you have associated companies, divide the £250,000 and £50,000 thresholds by the number of associated companies (including yours).

Enter your associated companies under Settings → Corporation tax → Associated companies.