If you run a limited company, you’ll have to pay corporation tax on all of your taxable profits in an accounting period. 

The corporation tax rate is set at the start of every financial year (April 1st), so it’s always wise to keep an eye on any changes in the rates and procedures. For the financial year 2022 – 2023, the corporation tax rate is 19% – same as last year. 

To help you stay navigate the confusing world of HMRC, this is your guide to corporation tax rates in 2022. 

Specifically, we’ll cover:

  • What is corporation tax?
  • Can I get relief on corporation tax?
  • How do I pay corporation tax?

There are a lot of different rules and regulations when navigating corporation tax. If you want to get the best rates, read our guide on How to reduce your corporation tax bill.

What is corporation tax?

Corporation Tax is a 19% charge on all of your company’s profits over an accounting period. Your accounting period is 12 months of trading, and it starts when you register your Company with HMRC. 

The actual payment is due nine months and one day after the end of your accounting period.

As a limited company, you’ll be taxed on any profits you’ve made from:

  • Doing business 
  • Investments
  • Selling assets for more than they cost 

If you’re based in the UK, you pay Corporation Tax on all profits from the UK and abroad.

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

Can I get relief on corporation tax?

When completing your company tax return, you can deduct certain business running costs from your taxable profits – they’re referred to as allowable expenses

Here are some of the running costs you can claim as allowable expenses, with examples:

  • Office costs – stationery or phone bills
  • Travel costs – fuel, parking, train fares, or bus fares
  • Clothing expenses – uniforms
  • Staff costs – salaries or subcontractor costs
  • Things you buy to sell on – stock or raw materials
  • Financial costs – insurance or bank charges
  • Costs of your business premises – heating, lighting, or business rates
  • Advertising or marketing – website costs
  • Training courses related to your business –  refresher courses

On top of business expenses, you can also claim capital allowances. Capital allowances apply to assets that you keep to use in your business, such as:

  • Equipment
  • Machinery
  • Business vehicles

Finally, there are some special cases where you can apply for corporation tax relief, depending on your business operations

Research and development (R&D) relief

If your company works on innovative projects in science and technology, you can apply for R&D relief

To get qualify, you need to explain how your projects:

  • Looked for an advance in science and technology
  • Dad to overcome uncertainty
  • Tried to overcome this uncertainty
  • Couldn’t be easily worked out by a professional in the field

The patent box 

The patent box allows corporation tax relief for businesses that have earned profits from a patented invention. The idea is to encourage innovation by UK businesses. 

To apply for the patent box relief, you need to show that your company:

  • Makes a profit from exploiting patented inventions
  • Owns or has exclusively licenced the patents
  • Has undertaken qualifying development on the patents

Patents, copyrights, and trademarks can get a little confusing. For more information, check out our article on the Copyright, Designs and Patents Act (1988).

Creative industries tax relief (CITR) 

It’s not just science and technology that gets special treatment. You could also apply for creative industries tax relief if your company supports or produces creative industries. 

To qualify, you need to show that your company is directly involved in the production and development of:

  • Films
  • High-end television
  • Children’s television
  • Animation television
  • Video games
  • Theatrical productions
  • Orchestral concerts
  • Museum or gallery exhibitions

How do I pay corporation tax?

When you register your limited company with HMRC, you’ll need to set up an HMRC online account. When you do, you’ll receive a 17-character Corporation Tax payslip reference number. 

You’ll need this information to pay your corporation tax bill through one of these methods:

  • Direct debit
  • Online or mobile bank account
  • Online or telephone bank transfer
  • Through your bank or building society

Remember, you can’t pay corporation tax through the post office anymore. For more detail on each of these payment methods, check out our guide on How to pay corporation tax

Manage your corporation tax with Countingup

If you’re paying corporation tax through your bank account, you’ll need to use a business account. So, you might as well use a business current account that actually helps you manage your taxes. 

With features like live tax estimates and automatic expense categorisation, you’ll know exactly how much tax you’re going to pay, and you’ll have all the information you need for your company tax return. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Start your three-month free trial today. 
Find out more here.