Register for tax and claim tax allowances

Understand your tax responsibilities and allowances as a business setting up in the UK.

Corporation Tax

You must pay Corporation Tax on profits from doing business as a limited company, or as an overseas company with a UK branch or office.

A limited company:

is legally separate from the people who run it
has separate finances from your personal ones
has shares and shareholders
can keep any profits it makes after paying tax

If your company is based in the UK, you must pay Corporation Tax on all profits from the UK and abroad.

If your company isn’t based in the UK but has an office or branch here, you will only pay Corporation Tax on profits from UK activities.

The government agency responsible for operating the UK tax system is known as HMRC (His Majesty's Revenue and Customs).

Corporation Tax rate

The UK benefits from the lowest Corporation Tax rate in the G7.

The current rate of Corporation Tax is 25% on all profits over £50,000.

If your business makes a profit of £50,000 or less, you’ll pay the ‘small profits rate’, which is 19%.

Taxable profits in the UK

The main elements of taxable profit for Corporation Tax are:

trading profits
rents
investment income
deposit interest
chargeable gains – this is a UK term for the increase in an asset's value between the time it’s purchased and the time it's sold

Register for Corporation Tax

Your company must register for Corporation Tax within 3 months of commencing trade or becoming active. If you don't do this, you may receive a penalty charge.

When you register your UK company, HMRC will write to your company’s registered UK address, with a unique tax reference (UTR) number and the tax office you’ve been assigned to. You’ll need this to complete your tax registration.

HMRC will also send a form (known as a CT41G) which must be completed to register for Corporation Tax. This can also be done online.

Tax charged on goods and services in the UK

Value Added Tax (VAT) is an amount charged on most goods and services that are purchased in the UK. It is charged by businesses at point of sale.  Most goods and services are charged at a standard rate of 20%.

Businesses must register for VAT if their  VAT  taxable turnover is more than £85,000. If you’re a VAT-registered business, you should:

include VAT in the price of all goods and services
keep records of how much VAT you pay for things you buy for your business
account for VAT on any goods you import into the UK
report the amount of VAT you charged your customers and the amount of VAT you paid to other businesses by sending a VAT return to HM Revenue and Customs (HMRC)

Find more information on how VAT works on GOV.UK.

Tax allowances available to UK companies

The UK has a variety of allowances which give companies tax relief on their expenditure.

Capital allowances

You can claim capital allowances if you buy assets that you keep to use in your business, for example:

equipment
machinery
business vehicles, such as cars, vans, and lorries

You can also claim tax allowances for business costs and a variety of other reasons, including renovation of business premises in some parts of the UK, and research and development.

Find out how to claim capital allowances on GOV.UK

Incentives and support

The UK offers attractive venture capital schemes to help small and medium enterprises expand. There’s also a variety of incentives and support available, with several related to innovation and research.

Find out more in our guides to accessing finance, and incentives, funding and support.

Next steps

Find contact details for UK tax specialists in our Investment Support Directory

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