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Corporation Tax Calculator
Calculate your company tax liability using our updated corporation tax calculator.
For most of our limited company clients, corporation tax is the largest single tax that they pay each year. It is calculated from the taxable profit taken from your company annual accounts and filed with the HMRC using the CT600 form. Use our limited company tax calculator here to determine how much corporation tax you will owe this year.
How to use our UK Tax Calculator:
1. Select your company year end. This is your accounting period end and is typically the last day of the month. If you are looking for a corporation tax 2023/24 calculator we can accommodate this too.
2. Turnover. This is how much you expect your company to invoice for the year. If you are VAT registered, ensure that your VAT is excluded from this figure.
3. Expenses. This one is usually a bit harder to estimate. If you have previous accounts and a CT600, then use the total taxable profit calculated in your last CT600 as a guide. Do not include any client entertainment costs, and if you have purchased assets in the year, then remove any depreciation from your expenses, and replace with the actual purchase cost of the asset. These are the most common adjustments we make for our ltd company contractor clients. If you are VAT registered on the standard rate scheme then leave all VAT out of your calculations.
Still have questions about how contracting through a limited company will work for you? We are always happy to talk!
What is Corporation Tax?
Corporate taxes apply to limited company contractors (and not sole traders). Your corporation tax bill is a tax imposed on the taxable profits of limited companies and is calculated once per year. The current standard rate is 19% though this is changing from April 2023. Use our calculator to see how these changes will affect your company tax. Companies are required to file a tax return and pay corporation tax to the HMRC on an annual basis.
How to calculate corporation tax
For all company profits with accounting periods up until 31 March 2023 the corporation tax rate is a flat rate of 19%. From 01 April 2023 onwards this tax rate changes to a sliding scale. For companies with taxable profits lower than £50,000 the tax rate remains at 19%. For companies with profits higher than £250,000 the tax rate of 25% Is applied to all profits. So what this means for companies with profits between 50,000 and 250,000 pounds the tax rate falls between 19 and 25%. How blog article on the calculation of corporation describes how this calculation is done.
It’s also worth keeping in mind that if your company accounting period straddles 01 April 2023, then some of your company profits will be calculated at the lower rate of 19% and the rest of the profits will be calculated using the new corporation tax rates. Our corporation tax calculator here will take this into account.
The CT600 is the HMRC company tax form that we complete and file (along with your company annual accounts) each year. The corporation tax calculation is performed as part of completed the CT600.
While our clients love to know how much corporation tax to put aside each year, these new tax rates being introduced in 2023 means the actual corporation tax rate for the year cannot be calculated until the taxable profit is known.
When to pay Corporation tax
Corporation tax is usually paid in a single amount once every year. Typically, the due date for payment is 9 months and one day following your company year end. So, for example if your company annual accounts were prepared to 31 October 2022 your corporation tax would need to be paid by 01 August 2023. When making payment to the HMRC, ensure you use the correct corporation tax payment reference number. This makes it easy for the HMRC to match the payment to the correct company year end. The correct corporation tax payment reference for each year is found in your HMRC business portal.
Ways to reduce your Corporation tax bill
There are very few reliefs or schemes available to our limited company contractor clients to help them reduce their corporation tax bill. The most common tax adjustments are made using capital allowances. These allowances allow you to reduce your taxable profit by the full purchase price of assets that you buy over the course of the company’s financial year. What this means is you get tax relief for the full cost of the asset in the first year of purchase. There are conditions around this and it does not apply to all asset classes, however for our clients the vast majority of assets that they purchase fall within the rules and they are allowed to get the full tax deduction.
Otherwise, our most common advice to clients is to ensure they’re claiming all allowable business expenses over the course of the company’s financial year which will help reduce their taxable profit. One common exception to this is client entertaining costs, which are not tax deductible.