Corporation Tax & the CT600: a director's guide
Rates, marginal relief, associated companies, capital allowances, losses, R&D relief and the deadlines every limited company must hit.
Every UK limited company pays Corporation Tax on its profits, works out its own bill, and files a CT600 return with HMRC. The rules changed materially in April 2023, and a few of them — marginal relief, associated companies, the loans-to-directors charge — catch small companies out every year. Here's what a director actually needs to know.
The rates: 19%, 25% and marginal relief
Since 1 April 2023 there have been two rates with a sliding scale between them:
| Profits | Rate |
|---|---|
| Up to £50,000 | 19% (small profits) |
| £50,001 – £250,000 | Marginal relief (~26.5% on the slice) |
| Over £250,000 | 25% (main rate) |
Marginal relief smooths the jump from 19% to 25% using a fraction of 3/200. The effect is that profits between £50,000 and £250,000 are effectively taxed at about 26.5% at the margin — higher than the headline 25%, which surprises people. From April 2023 you must actively claim the small-profits rate on the CT600; it's no longer automatic.
Associated companies divide the limits
From accounts profit to taxable profit
Your taxable profit isn't the same as your accounting profit. You start from the profit in your accounts and make tax adjustments:
- Add back things that aren't tax-deductible — depreciation, client entertaining, fines.
- Deduct capital allowances instead of depreciation.
- Bring in investment income and chargeable gains on assets sold.
Capital allowances and full expensing
Capital allowances are the tax system's version of depreciation — how you write off equipment against profit.
Full expensing, made permanent from April 2023, lets a company deduct the entire cost of qualifying new equipment in the year it's bought — a powerful timing benefit for investment.
Using losses
Make a loss and you have options: carry it forward against future profits (post-2017 losses are flexible and can be set against total profits or group-relieved), carry it back 12 months, or — when a company ceases — use terminal loss relief to go back three years. Large groups face a restriction: carried-forward losses can only relieve a £5m deductions allowance plus 50% of profits above it.
R&D and other reliefs
For accounting periods beginning on or after 1 April 2024, the old SME and RDEC R&D schemes merged into a single RDEC scheme with a headline 20% above-the-line credit (worth roughly 15% after tax). Loss-making, R&D-intensive SMEs — where R&D is at least 30% of total spending — get Enhanced R&D Intensive Support (ERIS), a more generous deduction and payable credit. Patent Box (10% effective) and creative-industry reliefs are also available to qualifying companies.
Deadlines: pay first, file later
Loans to your own company (the s.455 trap)
If a close company lends money to a director or shareholder — including an overdrawn director's loan account — and it isn't repaid within 9 months and 1 day of the period end, the company pays a 33.75% s.455 charge on the outstanding balance (reported on the CT600A page). It's refundable once the loan is repaid, but it's a real cash cost in the meantime and a frequent surprise for owner-managers who treat the company account as their own.
Sources & further reading
- 1GOV.UK — Corporation Tax rates and reliefs
- 2GOV.UK — Corporation Tax marginal relief
- 3GOV.UK — R&D tax relief: the merged scheme and ERIS
- 4GOV.UK — Capital allowances: permanent full expensing
- 5GOV.UK — Company Tax Returns — filing/payment deadlines + iXBRL
- 6GOV.UK — CT600A: loans to participators (s.455)
This guide is general information, not personal tax advice, and reflects the rules we believe to apply as at June 2026 — rates and thresholds change. Always check your own figures against HMRC and consider a qualified adviser before acting. You remain responsible for the accuracy of anything you file.
File your CT600 with confidence
Build FRS 105/102 accounts from your bank feed, compute the tax with marginal relief, and file the CT600 + iXBRL to HMRC.
Start freeFrequently asked questions
What is the Corporation Tax rate?
For the 2025 financial year it’s 19% on profits up to £50,000 and 25% above £250,000, with marginal relief tapering between the two. Those limits are divided by the number of associated companies.
When is Corporation Tax due?
Payment is due nine months and one day after your accounting period ends — before the CT600 itself, which isn’t due until twelve months after the period end. Large companies pay in quarterly instalments.
What is a CT600?
The Company Tax Return — the form a limited company files with HMRC to report its profit and Corporation Tax, normally with iXBRL accounts and a tax computation attached.
What is marginal relief?
A taper that smooths the jump from 19% to 25% for profits between £50,000 and £250,000, producing an effective marginal rate of 26.5% in that band.
What is the section 455 charge?
A 33.75% temporary tax a close company pays on loans to its directors or shareholders that are still outstanding nine months and one day after the year end. HMRC repays it once the loan is cleared.