Corporate Tax – FAQs Q1. What are the current UK corporation tax rates for 2025/26? In 2025/26, corporation tax is charged at 19% (the small profits rate) on profits up to £50,000, 25% (the main rate) on profits above £250,000, and a tapered marginal rate in between. The marginal relief calculation effectively creates a 26.5% rate on the slice between £50,000 and £250,000. The thresholds are reduced if your company has associated companies, which is one of the most common corporate tax pitfalls we help clients avoid in Milton Keynes. Q2. When is corporation tax due to be paid? For most companies, corporation tax must be paid within nine months and one day after the end of the accounting period. For example, a company with a 31 March year-end must pay corporation tax by 1 January. Larger companies with profits over £1.5 million must pay in quarterly instalments, and very large companies have an even earlier instalment regime. The CT600 return itself must be filed within 12 months of the period end. Q3. What expenses can I deduct from my company's taxable profits? You can deduct any expense that is wholly and exclusively for the purposes of the trade. This includes salaries, employer NICs, rent, utilities, software subscriptions, professional fees, marketing, training relevant to the business, mileage, and certain entertainment. Capital items like equipment qualify for capital allowances rather than direct deduction. Personal expenses, business entertainment of UK clients (for tax purposes), and fines are not deductible. Atlas Tax Advisors reviews every expense category to maximise legitimate deductions. Q4. What are capital allowances and how do they reduce my corporation tax? Capital allowances let your company deduct the cost of qualifying assets (equipment, machinery, vehicles, fixtures) from taxable profits, instead of treating them as everyday expenses. The Annual Investment Allowance gives 100% relief on up to £1 million of qualifying spend per year. Full Expensing offers a 100% first-year allowance on most plant and machinery for companies, with no upper limit. Used correctly, capital allowances can substantially reduce or even eliminate a corporation tax bill in investment years. Q5. Can my company claim R&D tax credits? If your company is investing in resolving genuine scientific or technological uncertainty, you may qualify for R&D tax relief. The current merged scheme provides a 20% above-the-line credit on qualifying expenditure for accounting periods beginning on or after 1 April 2024, with enhanced support for R&D-intensive SMEs. The rules tightened significantly from 2023 and HMRC scrutinises claims closely, so we work with experienced R&D specialists where appropriate to ensure claims are robust and well-evidenced. Q6. What is the difference between salary and dividends for company directors? Salary is taxed as employment income and attracts both employee and employer National Insurance, but it reduces company profits and corporation tax. Dividends are paid from after-tax profits, attract no NIC, and benefit from a £500 dividend allowance plus lower dividend tax rates (8.75%, 33.75%, 39.35%). The most tax-efficient mix changes every year as thresholds and rates shift. We model the optimal split for each director based on their full personal tax position annually. Q7. What happens if my company files corporation tax late? Late filing of the CT600 return triggers a penalty of £100 immediately, rising to £200 if you are more than three months late, with additional 10% or 20% surcharges on the unpaid tax for sustained delays. Late payment of corporation tax also accrues HMRC interest, currently several percentage points above base rate. Repeated lateness can flag your company for HMRC enquiry. Atlas Tax Advisors keeps clients well ahead of every deadline with proactive reminders and early preparation. Q8. Can I reduce corporation tax by making pension contributions? Yes. Employer pension contributions are generally a tax-deductible expense for the company and are not treated as a benefit in kind for the director, meaning they reduce corporation tax without triggering personal income tax or NIC. The contribution must meet the wholly and exclusively test and stay within the annual allowance (currently £60,000 for most people). For owner-managed businesses, pension contributions are often the single most tax-efficient way to extract profits. Q9. Do I need to file a corporation tax return if my company made a loss? Yes, every active limited company must file a CT600 return regardless of whether it made a profit or loss. Filing a loss return actually creates valuable tax assets: losses can be carried forward to offset against future profits, carried back against the prior year's profit, or in some cases surrendered within a group. Failing to file the return forfeits these benefits and triggers penalties even when no tax is due, so the deadline still matters. Q10. How can Atlas Tax Advisors help reduce my company's corporation tax bill? We start with a thorough review of your accounts to ensure every legitimate deduction and capital allowance is claimed. We then look at strategic areas including R&D tax relief, the Patent Box, group relief if you have multiple companies, optimised director remuneration, employer pension contributions, and timing of capital expenditure. Throughout the year we flag opportunities before they expire, so you benefit from real-time planning rather than reactive year-end calculations after the savings have already been lost.