UK companies need to pay Corporation Tax, VAT, employer National Insurance and business rates, depending on their profits, taxable turnover, payroll and premises. Directors and shareholders can also have personal tax obligations on salary, dividends and gains, while sole traders pay Income Tax and National Insurance through Self Assessment.
Running a limited company creates several tax responsibilities, but each one has a different trigger and deadline. Corporation Tax and employer National Insurance are company costs. VAT and PAYE are amounts the company accounts for and sends to HMRC. Tax on salary, dividends and personally owned shares belongs to the director or shareholder.
This guide explains the main UK limited company taxes for 2026/27, when they apply, the rates and thresholds to check, and the key dates to add to your calendar.
What Taxes Does a UK Limited Company Pay?
An active limited company must consider Corporation Tax first. VAT, PAYE, employer National Insurance and business rates apply only when the company meets the relevant conditions. Personal tax sits outside the company, even when the same person is both director and shareholder.
| Tax or obligation | When it applies | Main action or deadline |
|---|---|---|
| Corporation Tax | The company earns taxable profits from trading, investments or chargeable gains. | Pay within 9 months and 1 day after the accounting period ends. File the Company Tax Return within 12 months. |
| VAT | Taxable turnover goes over £90,000 in the previous 12 months, or is expected to go over £90,000 in the next 30 days. Voluntary registration is also available. | Charge the correct VAT rate, submit returns and pay any VAT due. The usual online deadline is 1 month and 7 days after the VAT period ends. |
| PAYE | The company pays a salary to a director or employee and registers as an employer. | Deduct Income Tax and employee National Insurance, report payroll on or before payday and send the deductions to HMRC. |
| Employer National Insurance | A director’s or employee’s earnings exceed the applicable secondary threshold. | For 2026/27, the standard rate is 15% on earnings above £5,000 a year, subject to special categories and reliefs. |
| Business rates | The company occupies rateable non-domestic premises, such as an office, shop or warehouse. | Pay the bill issued by the relevant local authority or rating body after any relief has been applied. |
| Personal tax | A director or shareholder receives salary, dividends, benefits or a gain from personally owned shares. | The individual reports and pays the relevant Income Tax, Dividend Tax, National Insurance or Capital Gains Tax. |
Corporation Tax for Limited Companies
Corporation Tax is paid by the company, not by its directors or shareholders. It applies to UK limited companies and can also apply to foreign companies with a UK branch or office, as well as some unincorporated organisations.
Profits Covered by Corporation Tax
Corporation Tax applies to taxable trading profits, investment income and profits from selling company-owned assets. Allowable business expenses and available tax reliefs can reduce the taxable profit. Dividends paid to shareholders are not business expenses and do not reduce the company's Corporation Tax bill.
Corporation Tax Rates for 2026/27
The Corporation Tax rates on most company profits are:
| Taxable profits | 2026/27 treatment | What it means |
|---|---|---|
| £50,000 or less | 19% small profits rate | Applies when the company qualifies for this rate. |
| Above £50,000 and up to £250,000 | 25% main rate, reduced by Marginal Relief | The effective rate rises gradually between 19% and 25%. |
| Above £250,000 | 25% main rate | The full main rate applies. |
The £50,000 and £250,000 limits are reduced for a short accounting period and when the company has associated companies. Marginal Relief reduces the tax payable when profits fall between the two limits.
Corporation Tax Registration, Payment and Filing
- Tell HMRC when the company starts trading: Do this within 3 months of starting business activity or restarting a dormant company.
- Keep accounting records: Use accurate records to calculate taxable profit and prepare the Company Tax Return.
- Pay Corporation Tax: Most companies pay within 9 months and 1 day after the accounting period ends.
- File the Company Tax Return: The usual deadline is 12 months after the accounting period ends, even though the payment deadline arrives earlier.
A company that is dormant for Corporation Tax normally has no Corporation Tax to pay, but Companies House filing duties can still apply. Review the requirements for dormant company accounts and tell HMRC if the company starts trading again.
VAT for Limited Companies
Value added tax (VAT) is added to most goods and services sold by VAT-registered businesses. A registered company charges VAT on taxable sales, reclaims eligible VAT paid on business purchases and pays HMRC the difference when the VAT charged is higher than the VAT it can reclaim.
VAT Registration Threshold
A UK-based company must register for VAT when either of these tests is met:
- Its total taxable turnover for the previous 12 months goes over £90,000. Registration is normally required within 30 days of the end of the month when the VAT threshold was exceeded.
- It expects taxable turnover to go over £90,000 in the next 30 days. Registration is required by the end of that 30-day period.
The first test uses a rolling 12-month period, so taxable turnover should be checked at the end of every month rather than only at the end of the financial year.
VAT Rates and Records
The standard VAT rate is 20%. A reduced 5% rate applies to certain goods and services, including children's car seats and qualifying home energy. Zero-rated items include most food, children's clothing and printed books.
Zero-rated and exempt sales are different. Zero-rated sales are taxable at 0%, while exempt sales are outside the VAT charge and can limit how much VAT the company reclaims. Most VAT-registered businesses must keep digital records and use compatible software to submit returns.
VAT Return and Payment Deadlines
VAT returns are usually submitted every 3 months. The online filing and payment deadline is normally 1 calendar month and 7 days after the VAT period ends. The company must submit a return even when there is no VAT to pay or reclaim. Different dates can apply under special VAT accounting arrangements, so always check the company's VAT account.
Voluntary VAT Registration
A company can register voluntarily when its taxable turnover is below £90,000. This can help it reclaim eligible VAT on business purchases, especially when most customers are VAT-registered. It also adds invoicing, record-keeping and filing duties, and it can affect prices for customers who cannot reclaim VAT.
Review expected turnover, customer type and VAT-bearing costs before deciding. Our VAT registration service can help with the application.
PAYE and Employer National Insurance
PAYE is the payroll system used to deduct Income Tax and employee National Insurance from salary. The company reports pay and deductions to HMRC, sends the deductions to HMRC and pays employer National Insurance where required.
PAYE Registration and Payroll Reporting
A company that pays a director or employee needs to register as an employer before the first payday. It must run payroll, keep payroll records and send a Full Payment Submission to HMRC on or before each payday. The submission reports gross pay, Income Tax, employee National Insurance and other deductions. HMRC issues an employer PAYE reference after registration.
Employer National Insurance Rates for 2026/27
The main employer National Insurance rates and thresholds for 2026/27 are:
| 2026/27 item | Rate or threshold | How it applies |
|---|---|---|
| Standard employer Class 1 rate | 15% | Usually charged on earnings above the relevant threshold. |
| Secondary threshold | £96 a week, £417 a month or £5,000 a year | The standard point at which employer Class 1 National Insurance starts. |
| Employment Allowance | Up to £10,500 for eligible employers | Reduces the employer Class 1 National Insurance bill. |
Different thresholds can apply to certain employees, including qualifying employees under 21, apprentices under 25, veterans and eligible Freeport or Investment Zone employees. A company with one director cannot claim Employment Allowance when that director is its only employee liable for employer Class 1 National Insurance.
PAYE and National Insurance Payment Deadlines
Pay HMRC by the 22nd after the end of the tax month when paying electronically, or by the 19th when paying by post. A company that usually pays less than £1,500 a month is allowed to pay quarterly. Payroll reports are still due on or before payday.
Business Rates for Company Premises
A company pays business rates when it occupies non-domestic property, such as an office, shop, warehouse or factory. The occupier normally receives the bill. The calculation, reliefs and billing process differ across England, Scotland, Wales and Northern Ireland.
Business Rates Calculation and Reliefs
The basic calculation uses the property's rateable value and the multiplier or poundage set for its location. Relief is then deducted where the company qualifies. Small-property, rural, charitable, retail and hospitality reliefs may reduce the bill, but the available schemes and conditions depend on the nation and local area.
Business Rates Bills and Payment Dates
The bill shows the amount due, any relief applied, the instalment dates and the payment methods. Add the dates to the company's cash-flow calendar as soon as the bill arrives. Contact the billing authority if the property details are wrong, a relief is missing, or the company cannot pay an instalment.
Personal Taxes for Directors and Shareholders
A limited company and its owners are separate taxpayers. The company pays its own liabilities. Directors and shareholders deal personally with tax on salary, dividends, benefits and gains from shares they own.
Tax on a Director's Salary
A director is treated as an employee for Income Tax and National Insurance. The company deducts Income Tax and employee National Insurance through PAYE. For 2026/27, the standard Personal Allowance is £12,570, although it can be reduced when income exceeds £100,000. Income Tax rates differ in Scotland.
Directors' National Insurance is usually calculated using annual earnings rather than the standard employee method. The amount depends on salary, bonuses, National Insurance category and when the director was appointed.
Dividend Tax Rates for 2026/27
A company can pay dividends only from available profits. Dividends do not reduce the company's Corporation Tax bill. The shareholder deals with any personal Dividend Tax due.
For 2026/27, the Dividend Allowance is £500. Dividend income above the available Personal Allowance and Dividend Allowance is taxed according to the shareholder's Income Tax band. A person's dividends can fall into more than one band.
| Income Tax band | 2026/27 Dividend Tax rate above the allowance |
|---|---|
| Basic rate | 10.75% |
| Higher rate | 35.75% |
| Additional rate | 39.35% |
Reporting Dividend Income
You do not need to tell HMRC when dividend income is covered by your available Personal Allowance and Dividend Allowance. If taxable dividend income is up to £10,000 and you already file a Self Assessment return, include it on the return. If you do not normally file, tell HMRC after the tax year ends and before 5 October.
Dividend income over £10,000 must be reported through Self Assessment. If you do not normally file a return, register for Self Assessment by 5 October after the relevant tax year.
Capital Gains Tax on Company Shares
A limited company normally pays Corporation Tax on profits from assets it owns. An individual shareholder pays Capital Gains Tax when personally owned shares are sold or transferred at a profit. The amount depends on the gain, available allowances, the person's taxable income and any relief that applies.
Making Tax Digital for Income Tax
Making Tax Digital for Income Tax does not apply to income earned through a limited company. However, it applies if a director or shareholder also earns qualifying income as a sole trader or landlord.
It became mandatory from 6 April 2026 for people with qualifying income above £50,000. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028. Those affected must keep digital records and submit quarterly updates using compatible software.
Quarterly updates do not replace the annual Self Assessment tax return. The filing and payment deadline remains 31 January.
Managing Your Company Tax Deadlines
Keep separate records and calendar entries for Corporation Tax, VAT, payroll, business rates and personal tax. Review turnover every month for VAT, complete payroll before each payday and plan for Corporation Tax well before the payment deadline. Record salary, dividends, benefits and director's loans correctly when they occur.
If you are setting up a new company, Your Company Formations can help with company formation and supporting services. An accountant can advise on calculations, reliefs and the tax treatment of your specific circumstances.
