Creative Takeaways
- Corporation tax (CT) is a tax on company profits, separate from personal income tax.
- CT applies to limited companies, PLCs, UK branches of foreign companies, and some associations.
- Profits include trading income, investments, and capital gains.
- UK-based companies pay tax on worldwide profits, while overseas companies pay only on UK activities.
- You must register with HMRC within 3 months, usually via Companies House.
- Returns must be filed within 12 months, but tax must be paid within 9 months and 1 day.
- For 2025/26, the rate is 25% for large profits and 19% for small profits, with a tapered rate in between.
- Missing deadlines can result in HMRC penalties and interest.
Here’s the official explanation from HMRC:
Table of contents
1. Who has to pay corporation tax?
Corporation tax isn’t just for big companies. You’ll need to pay it if you run:
- A limited company (Ltd)
- A public limited company (PLC)
- A foreign company with a branch or office in the UK
- Certain clubs, co-operatives or community groups that make a surplus
Corporation tax is likely to apply if your organisation is making taxable profits and it’s formally set up as a company or association.
2. What counts as a profit?
Corporation tax applies to more than just money earned from selling products or services.
Profits include:
- Trading profits: income from your core business activities
- Investment income: things like interest, dividends or rental income
- Capital gains (chargeable gains): profits made from selling assets such as property, shares, or equipment
Together, these form the total taxable profits on which corporation tax is calculated.
You can work out your corporation tax with guidance from HRMC.
3. Corporation tax bill differences: UK vs. Overseas
Where your company is based affects how much of your profit is taxed.
| Company location | What you pay tax on |
|---|---|
| Based in the UK | All taxable profits, including those made abroad |
| Based outside the UK (with UK branch/office) | Only profits from UK activities |
So if you’re running a UK company, overseas earnings are still caught by corporation tax. But if you’re an overseas business with just a UK presence, only the UK slice of profits is taxed.
Say your UK-based company makes £150,000 in profit. Corporation tax applies to the whole amount, worldwide:
- First £50,000 taxed at 19% = £9,500
- Remaining £100,000 falls into the marginal band. Effective tax here is just under 25%, thanks to Marginal Relief.
- The blended effective rate ends up a little above 22%.
Now let’s say you’re a foreign company with a UK branch. If the branch earns £300,000 but only £150,000 is earned from UK activity, only that £150,000 from UK activity is taxed under the same rates.
4. How to register for corporation tax with HMRC
You must register for corporation tax within 3 months of starting business activity. Here’s how to register for corporation tax with HMRC.
- Set up your business
Most companies register with Companies House first.
Independent associations (like clubs or co-ops) need to write directly to HMRC. - Access your business tax account
You’ll get a Unique Taxpayer Reference (UTR) from HMRC.
Use it to sign in and complete the registration online. - Confirm your details
Company name and number
Start date of trading
Accounting period dates - Submit your registration
Once registered, HMRC will expect your corporation tax return each year.
5. Corporation tax deadlines
Once you’re registered, there are two key responsibilities: filing your return and paying the tax.
- File your Company Tax Return
- Must be submitted within 12 months of the end of your accounting period.
- You must file even if you made a loss or no tax is due.
- Pay your Corporation Tax
- Payment is due 9 months and 1 day after the end of your accounting period.
- This deadline comes before the filing deadline.
- Penalties
- Late filing or payment can trigger automatic penalties and interest from HMRC.
Make sure to check out all the other tax deadlines on our blog.
6. Corporation tax rate in 2025/26
The main rate of corporation tax in the UK is set by the government and can change depending on the financial year.
- For the 2025/26 tax year, the main rate is 25% on profits above £250,000.
- Small profits under £50,000 are taxed at a 19% rate.
- Profits between these two thresholds are taxed at a tapered rate.
Because the rate can change, it’s always best to check the latest figures on GOV.UK before working out your tax bill.
7. Pay your corporation tax bill with WallsMan Creative
Running a creative business means your energy should go into the work you love, not wrestling with tax deadlines. Corporation tax is just one piece of the admin puzzle – but it’s one that can trip you up if you miss the details.
At WallsMan Creative, we help creative businesses in the UK stay compliant, keep accounts in order, and free up time to focus on growth.
