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Glossary

Corporation Tax:

/ˌkɔː.pəˈreɪ.ʃən tæks/ noun Tax you pay on business profits, when registered as a limited company.

You must pay Corporation Tax on profits from doing business as a limited company.

You must register for Corporation Tax when you start working for yourself as a limited company.

Corporation Tax is 25%, or 19% for companies with profits below £50,000.

As an individual, you’ll still be paying Income Tax on any money you earn from your business, but Corporation Tax is a separate tax payable by the company.

If you’re registered as a sole trader, Corporation Tax is unlikely to apply to you.

Related Glossary Terms

Income Tax

Tax due payable to anyone earning over a certain income in the UK, and the primary tax you'll pay when you're self-employed

VAT

Value Added Tax, additional tax you'll be charging your customers and liable to pay to HMRC, when your turnover is over £90,000

Self Assessment

The process of calculating and reporting your income and expenses to HRMC each year, rather than being taxed at source.

Sole Trader

A sole trader is considered to be ‘self-employed', and is the singular owner of a business, entitled to keep all profits but liable for all losses.

Limited Company

A limited company is one of the legal formations of a business in the UK. Whilst you're not technically self-employed if you're a limited company director, many sole-owners of limited companies describe themselves as self-employed.

More from the Ecosystem

Corporation Tax
Official guidance from HMRC on Corporation Tax
gov.uk
How much is corporation tax and what are the reliefs?
Useful guide to understanding Corporation Tax and reducing your liability
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