Do I Need to File a Corporation Tax Return?

If you run a limited company in the UK, the short answer is almost certainly yes. Corporation Tax returns are one of those obligations that catch business owners out — not because the rules are especially complicated, but because the assumptions people make about them are often wrong. Made no profit? You still file. Company dormant? You may still file. Already submitted your accounts to Companies House? That is a separate filing entirely. Here is what you actually need to know.

Who Has to File a Corporation Tax Return?

Every UK limited company must register for Corporation Tax, file a Company Tax Return (the CT600), and pay any tax owed. This applies whether your company made a substantial profit, broke even, or made a loss. The obligation attaches to the company, not to its profitability.

The same applies to unincorporated associations, clubs, and co-operatives carrying on business activity. Sole traders and ordinary partnerships do not file Corporation Tax returns — they report through Self-Assessment instead.

The critical trigger is HMRC issuing a notice to file. Once that notice lands, you must submit a return — even if the company was dormant for the entire period and even if there is no tax to pay. Ignoring it because there was no activity is one of the most common and most avoidable ways businesses pick up penalties.

Corporation Tax Rates for 2026/27

The tiered structure introduced in April 2023 remains in place, with no changes for the current year:

Small profits rate — 19% on taxable profits up to £50,000.

Main rate — 25% on taxable profits of £250,000 or more.

Marginal relief — profits between £50,000 and £250,000 are charged at 25% with a tapering relief applied, producing an effective rate that climbs gradually from 19% towards 25%.

There is a quirk in the marginal band worth understanding. Although the overall effective rate stays between 19% and 25%, the marginal rate on each additional pound earned within that band is 26.5% — higher than the main rate itself. For a company sitting just inside the band, that has real implications for decisions about timing income, pension contributions, and capital expenditure.

Associated Companies Can Push You Into a Higher Band

This is the rule that surprises people most. If your company has associated companies, the £50,000 and £250,000 thresholds are divided equally between them.

Two companies are associated where one controls the other, or where both are controlled by the same person or group of people. So a director who owns two trading companies does not get two sets of thresholds — each company's small profits limit drops to £25,000 and its upper limit to £125,000. A third company brings both down again.

The rules were tightened from April 2023 and now catch a wider range of structures than many owners realise. Dormant companies and certain holding companies are excluded from the count, but if you hold interests in more than one company it is worth having the position reviewed rather than assuming the standard thresholds apply.

The Two Deadlines — And Why They Are Different

Corporation Tax has an unusual arrangement: you have to pay the tax before you have to file the return.

Payment is due nine months and one day after the end of your accounting period. Filing the CT600 is due twelve months after the end of your accounting period.

So a company with a 31 March 2026 year-end must pay by 1 January 2027 and file by 31 March 2027. In practice this means you need your figures substantially finalised well before the filing deadline, because you cannot pay the right amount without knowing what it is. Interest accrues on anything unpaid from the payment date onwards.

Larger companies with profits above £1.5 million pay by quarterly instalments during the accounting period rather than in a single sum afterwards.

Important: HMRC's Free Filing Service Has Closed

This is the change most likely to affect small companies this year. HMRC's free CT600 filing service closed permanently on 31 March 2026. If you previously filed your own return through that portal, that route no longer exists.

You must now file electronically using approved commercial software, or engage an accountant like us to file on your behalf. If your year-end has passed and you have not yet made arrangements, this is worth addressing now rather than discovering the problem a fortnight before your deadline.

On a more welcome note, HMRC confirmed in July 2025 that it does not plan to extend Making Tax Digital to Corporation Tax. Companies continue to file an annual CT600 in the usual way, with no quarterly reporting requirement on the horizon.

What Happens If You File Late

Penalties are automatic and escalate. A return filed one day late attracts an immediate £100 penalty, with a further £100 after three months. Beyond six months HMRC estimates your bill and adds a tax-geared penalty of 10% of the unpaid amount, with a further 10% after twelve months. Persistent late filing — three consecutive periods — increases the initial penalties from £100 to £500 each.

None of this is discretionary in the way a first-time offender might hope. The penalties apply regardless of whether tax was actually owed.

Corporation Tax and Your Payroll

The two are more closely linked than most owners assume. Salaries and employer National Insurance contributions are allowable deductions that reduce your taxable profit, so how you structure director remuneration directly affects your Corporation Tax bill.

Dividends, by contrast, are paid out of post-tax profits and do not reduce Corporation Tax at all. The salary-versus-dividend balance is therefore a decision that sits across payroll, Corporation Tax, and personal tax simultaneously — and getting it wrong in one place tends to cost money in another. Employer pension contributions are also deductible and are frequently the most efficient route for a company sitting in the marginal relief band.

How Crown Payroll Services Can Help

Corporation Tax is not a standalone exercise. It connects to your year-end accounts, your payroll, your director remuneration, and your personal tax position — and decisions made in one area routinely have consequences in another.

We can help you understand your filing obligations, plan your remuneration structure efficiently, and make sure your deadlines are met without a last-minute rush.

Call us on 01942 644864 or email hello@crownpayrollservices.co.uk to talk through your company's position.