What taxes does a limited company pay?

The company's taxes and your own are separate

The first thing to get clear is whose tax is whose. The company pays tax on what the company earns and does. The directors and shareholders pay tax on what they personally take out of it. For every tax a small business may face, see our small business tax overview.

• Company taxes. Corporation Tax, employer National Insurance, VAT if registered, and a few special charges. These come out of the company bank account.
• Personal taxes. Income Tax on a director's salary, and dividend tax on dividends received. These belong to the individual, even though salary tax is collected through the company payroll.

This guide focuses on the company side. For how salary and dividends are taxed in your own hands, see paying yourself as a limited company director and dividend tax rates.

Corporation Tax: the tax every trading company pays

Corporation Tax is charged on the company's taxable profits. That covers trading profit, investment income such as interest, and chargeable gains when the company sells an asset for more than it cost. A UK resident company pays it on profits made in the UK and abroad.

The company can be set up for Corporation Tax when it is registered with Companies House. If that step was missed, it can be added later through the company's business tax account.

The rates from 1 April 2026

• Small profits rate: 19%. For taxable profits of £50,000 or less.
• Main rate: 25%. For taxable profits over £250,000.
• Marginal Relief. For profits between £50,000 and £250,000. The company starts at 25% and then deducts relief, using a standard fraction of 3/200. The effective rate rises gradually between the two limits.

Both limits shrink if the accounting period is shorter than 12 months. They are also divided between associated companies. For example, a company with 3 associated companies divides each limit by 4.

A hypothetical worked example

Take a made-up company with taxable profits of £100,000 for a 12 month period and no associated companies.

• Tax at the main rate: £100,000 × 25% = £25,000
• Marginal Relief: 3/200 × (£250,000 − £100,000) = £2,250
• Corporation Tax due: £25,000 − £2,250 = £22,750, an effective rate of 22.75%

The same company with profits of £50,000 would pay 19%, which is £9,500. Taxable profit is not always the same as the profit in your accounts. Tax rules decide which costs can be deducted, and equipment and vehicles are relieved through capital allowances. Our guide to allowable expenses for limited companies covers what can be deducted.

Two deadlines, not one

Corporation Tax has a payment date and a filing date, and the payment comes first.

• Pay 9 months and 1 day after the end of the accounting period.
• File the Company Tax Return 12 months after the end of the accounting period.

Companies with profits over £1.5 million pay in instalments instead. The detail on references, payment methods and late payment is in our guide on how to pay your Corporation Tax bill.

Employer National Insurance and PAYE

Once the company pays anyone a salary, including a director, it becomes an employer. It then runs payroll and reports each payment to HMRC through PAYE.

Two kinds of money pass through payroll. Income Tax and employee National Insurance are deducted from the employee's pay. They are the employee's tax, which the company collects and passes on. Employer National Insurance is different. It is a cost to the company, on top of the salary.

Employer rates for 2026/27

• Employer Class 1 rate: 15%. Charged on earnings above the secondary threshold.
• Secondary threshold: £5,000 a year. Below this, the company pays no employer National Insurance on that person.
• Employment Allowance: up to £10,500. Eligible employers can reduce their yearly employer National Insurance bill by this amount.

As a hypothetical example, an employee on £30,000 a year costs the company (£30,000 − £5,000) × 15% = £3,750 in employer National Insurance, before any Employment Allowance.

Employment Allowance has limits. If a company has only one director, that director must not be the only employee whose pay is above the secondary threshold. Only one company in a connected group can claim it, and it can be claimed against only one payroll.

When payroll tax is paid

PAYE, including employer National Insurance, is usually paid monthly. Electronic payments are due by the 22nd of the next tax month. Cheques sent by post must reach HMRC by the 19th.

Benefits in kind

If the company gives staff or directors taxable benefits, such as a company car or private medical cover, it may owe Class 1A National Insurance. The rate for 2026/27 is 15%. Benefits are reported on forms P11D and P11D(b) by 6 July after the tax year ends. The Class 1A payment is due by 22 July, or 19 July if paying by cheque.

VAT, if the company is registered

VAT is not a tax on profit. A registered company charges VAT on its sales, reclaims VAT on most business costs, and pays HMRC the difference. If it reclaims more than it charges, HMRC pays the company.

A company must register if its taxable turnover for the last 12 months goes over £90,000. It must also register if it expects to go over £90,000 in the next 30 days alone. Some companies register voluntarily below that level.

Returns are usually due one calendar month and 7 days after the end of each VAT period, and payment is due by the same date. For the different ways VAT can be worked out, see our guide to VAT schemes.

CIS, for construction companies

A company that pays subcontractors for construction work is a contractor under the Construction Industry Scheme. It usually deducts money from subcontractors' payments and passes it to HMRC. Monthly returns are due by the 19th of the month after each tax month. Payment is due by the 22nd, or the 19th by post.

A company that works as a subcontractor may suffer CIS deductions itself. Those can be set against what it owes through its own payroll. Our guide on how CIS tax works explains the rates and the paperwork.

The charge on an overdrawn director's loan

If a director takes money from the company that is not salary, a dividend or an expense repayment, it goes on the director's loan account. When the director owes the company money at the year end, there can be a tax charge on the company.

If the loan is not repaid within 9 months of the end of the accounting period, the company pays Corporation Tax on the amount outstanding at 35.75% for loans made on or after 6 April 2026, 33.75% for loans made from 6 April 2022 to 5 April 2026, and 32.5% for loans made before 6 April 2022. The company can claim this back once the loan is repaid or written off, but only after the relief falls due, and HMRC does not refund any interest.

This bill often catches small companies out. It usually comes from personal spending on the business card that nobody spotted until the accounts were prepared. Our guide to the director's loan account covers how the balance builds up.

A quick checklist

• Every company with taxable profits: Corporation Tax.
• Any company running a payroll: PAYE, and employer National Insurance on pay above £5,000 a year.
• Any company giving benefits: Class 1A National Insurance.
• Companies over £90,000 taxable turnover, or registered voluntarily: VAT.
• Construction contractors: CIS deductions and monthly returns.
• Directors who owe the company money at the year end: the director's loan charge.

Every one of these depends on the books being right. Corporation Tax is worked out from the year's records. VAT comes from each quarter's sales and costs. A director's loan balance is only visible if personal spending is spotted and coded as it happens. If you want to see how these taxes compare with running as a sole trader, read our sole trader vs limited company tax breakdown.