UK companies and UK branches of foreign companies pay corporation tax at 25% on profits above £250,000, with a 19% small profits rate and marginal relief in between. VAT is 20% with a £90,000 registration threshold, but non-established businesses have no threshold. Interest and royalties paid abroad generally carry a basic-rate withholding unless treaty relief is obtained, large groups face Pillar Two top-up taxes and transfer pricing documentation, and accounts must be filed at Companies House within 9 months of year end.
Corporation tax
The main rate is 25% for profits over £250,000 and the small profits rate is 19% below £50,000, with marginal relief using a 3/200 fraction in between. Groups should check how the limits apply where there are associated companies or short accounting periods.
Corporation tax is due 9 months and 1 day after the end of the accounting period, and the Company Tax Return 12 months after. Large and very large companies have different payment dates.1234
VAT
The standard rate is 20%, with a 5% reduced rate and zero-rating for items such as most food. A UK-established business registers when taxable turnover passes £90,000 in a rolling 12 months or is expected to pass it within 30 days.
A business established outside the UK has no threshold and must register as soon as it makes taxable supplies in the UK. Northern Ireland follows EU VAT rules for goods under the Windsor Framework, which matters for anyone moving goods between Great Britain, Northern Ireland and the EU.5678
Withholding taxes and treaties
Companies paying yearly interest must deduct income tax at the savings basic rate, and royalties for intellectual property paid to non-UK owners carry basic-rate deduction. The UK's treaty network can cut these rates, but relief is not automatic: the recipient applies on form DT Company, uses the Treaty Passport scheme for loans, or the payer applies the treaty rate for royalties on a reasonable belief that the recipient qualifies.
This guide has not confirmed the UK treatment of dividends paid to non-residents from an official page; check it before modelling repatriation.91011
Large groups: transfer pricing and Pillar Two
UK entities of multinational groups with revenue of at least €750 million must keep an OECD-format master file and local file for accounting periods from 1 April 2023. Smaller groups must still price related-party transactions at arm's length and keep records that support their returns.
The UK's Multinational Top-up Tax and Domestic Top-up Tax apply a 15% minimum effective rate to groups with revenue of €750 million or more, for accounting periods starting on or after 31 December 2023. Groups must register within 6 months of the end of their first in-scope period even if nothing is due.121314
Accounts and audit
Accounts follow either IFRS or UK GAAP and are filed with Companies House within 9 months of year end, or 21 months from incorporation for the first accounts. For financial years beginning on or after 6 April 2025, a private company meeting two of three tests (turnover up to £15 million, balance sheet up to £7.5 million, 50 or fewer employees) can usually claim audit exemption. Subsidiaries, banks, insurers and listed companies generally cannot.41516
| Item | Rate or threshold | Notes |
|---|---|---|
| Corporation tax main rate | 25% | Profits over £250,000 |
| Small profits rate | 19% | Profits under £50,000; marginal relief between |
| VAT standard rate | 20% | Reduced 5%; zero rate 0% |
| VAT registration threshold | £90,000 | No threshold for non-established businesses |
| Withholding on yearly interest and IP royalties | Income tax at the basic rate (savings basic rate for interest) | Reducible under treaties |
| Pillar Two minimum rate | 15% | Groups with revenue of €750m or more |
| Small company audit exemption | 2 of: £15m turnover, £7.5m balance sheet, 50 employees | Financial years from 6 April 2025 |
How it works, step by step
- Register the company or branch for corporation tax once it starts doing business3HM Revenue & Customs
- Assess VAT registration: immediately for a non-established business making UK supplies, or when the £90,000 threshold is reached67HM Revenue & Customs
- Set up withholding procedures and treaty relief claims for interest and royalty payments abroad91011HM Revenue & Customs (Double Taxation Treaty Team)
- File accounts with Companies House and the Company Tax Return with HMRC by their deadlines4Companies House; HM Revenue & Customs
- For large groups, prepare master and local files and register for Pillar Two top-up taxes1214HM Revenue & Customs
No timings or fees are shown unless an official source states them.
Documents usually needed
- Statutory accounts under IFRS or UK GAAP
- Company Tax Return (CT600) with computations
- VAT registration and digital VAT records
- Treaty relief forms (DT Company) or Treaty Passport details for lenders
- Transfer pricing master file and local file (groups of €750m or more)
Common mistakes
- Assuming a foreign company selling into the UK can wait for the £90,000 VAT threshold.
- Paying interest or royalties abroad gross without an HMRC direction or a reasonable basis for applying the treaty rate.
- Budgeting for the 19% small profits rate without checking how the profit limits apply within a group.
- Missing the Pillar Two registration deadline because no top-up tax is expected.
- Claiming audit exemption for a subsidiary that does not meet the subsidiary exemption conditions.
When the business crosses borders
- Treaty relief must be claimed in advance or by repayment; relief is not automatic.
- Branches are taxed on profits attributable to the UK permanent establishment, so profit attribution needs documentation.
- Northern Ireland applies EU VAT rules for goods under the Windsor Framework.
- Pillar Two top-up tax can arise in the UK on low-taxed profits elsewhere in the group.
Questions businesses ask
What corporation tax rate applies?
25% on profits over £250,000, 19% on profits under £50,000, and the main rate reduced by marginal relief in between. Check how the limits apply where the company has associated companies.12
When are accounts and tax due?
Accounts are due at Companies House 9 months after year end; corporation tax is payable 9 months and 1 day after the accounting period and the return is due within 12 months.4
Does a small subsidiary need an audit?
Possibly. The small company exemption usually does not extend to subsidiaries unless they qualify for the separate subsidiary exemption.16
What this guide does not yet confirm
These points need checking with a qualified local professional in the United Kingdom before you rely on them.
- The UK treatment of dividends paid to non-residents (generally understood to carry no withholding) was not confirmed on an opened official page.
- The deadline to register a new company for corporation tax was not confirmed on an opened page.
- How the £50,000 and £250,000 limits are divided between associated companies, and quarterly instalment rules for large companies, were not confirmed on an opened page.
- The start date of the undertaxed profits rule within Multinational Top-up Tax was not confirmed on an opened page.
- The savings basic rate applying to interest withholding from 6 April 2027 needs checking against the Finance Act changes flagged in the legislation text.
- Making Tax Digital requirements, R&D reliefs, stamp duties and devolved property taxes (Scotland's Land and Buildings Transaction Tax, Wales's Land Transaction Tax) were not researched.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
The main rate of UK corporation tax is 25% for profits over £250,000 and the small profits rate is 19% for profits under £50,000, for the financial years 2025 and 2026. UK-resident companies and non-resident companies with a UK permanent establishment.
Companies with profits between £50,000 and £250,000 pay the main rate reduced by marginal relief, using a standard fraction of 3/200. Financial years 2025 and 2026.
Corporation tax is paid by UK limited companies and by foreign companies with a UK branch or office. Clubs, co-operatives and other unincorporated associations are also within scope.
A private company must file annual accounts with Companies House within 9 months of its financial year end (first accounts within 21 months of incorporation), pay corporation tax within 9 months and 1 day of the end of its accounting period, and file its Company Tax Return within 12 months. Private limited companies. Different payment dates apply to large and very large companies.
The standard VAT rate is 20%, with a 5% reduced rate and a 0% rate for items such as most food and children's clothes. Some supplies, such as financial and property transactions, are exempt.
A UK-established business must register for VAT when taxable turnover for the last 12 months goes over £90,000, or when it expects to exceed £90,000 in the next 30 days. Registration is due within 30 days of the end of the month in which the threshold was crossed (12-month test) or by the end of the 30-day period (forward-looking test).
A business based outside the UK must register for VAT regardless of turnover if it supplies goods or services in the UK, or expects to within 30 days. Non-established taxable persons. Exemption from registration is available only if all taxable supplies are zero-rated.
Under the Windsor Framework, EU VAT rules continue to apply to goods in Northern Ireland, and VAT-registered businesses trading goods between Northern Ireland and the EU use an XI prefix on their VAT number. Qualifying goods moving from Northern Ireland to Great Britain need no import declaration; duty treatment of goods entering Northern Ireland from Great Britain depends on showing they are not at risk of moving into the EU.
Companies paying yearly interest arising in the UK must deduct income tax at the savings basic rate when making the payment. Income Tax Act 2007 s874; applies to payments by companies and to payments to persons whose usual place of abode is outside the UK. Treaty relief can reduce or remove the deduction, for example under the Double Taxation Treaty Passport scheme or with an HMRC direction.
The savings basic rate figure was not separately confirmed on an opened page; the basic rate on earnings for 2026-27 is 20%. The legislation text flags an amendment to the wording from tax year 2027-28; confirm the rate for payments from 6 April 2027.
Royalties for the use of intellectual property paid to an owner whose usual place of abode is outside the UK must be paid with income tax deducted at the basic rate. Income Tax Act 2007 s906. Payments for copies of works exported for distribution outside the UK are excluded. A company may deduct only the treaty rate if it reasonably believes the recipient is entitled to treaty relief (ITA 2007 s911).
Treaty-rate deduction without prior clearance is described in HMRC Company Taxation Manual CTM35270.
Relief from UK withholding tax under a double taxation treaty is not automatic: the overseas recipient applies to HMRC (for companies, on form DT Company) or uses the Double Taxation Treaty Passport scheme for loans. Interest, royalties and similar payments to non-UK residents.
UK entities of multinational groups with consolidated revenue of at least €750 million must keep a master file and local file in the format of the OECD Transfer Pricing Guidelines. Transfer Pricing Records Regulations 2023; corporation tax accounting periods beginning on or after 1 April 2023. The group must have enterprises resident in two or more jurisdictions and the UK entity must have material controlled transactions.
Effective date confirmed on INTM450010.
The UK applies Pillar Two through Multinational Top-up Tax and Domestic Top-up Tax for accounting periods starting on or after 31 December 2023, imposing a 15% minimum effective rate on groups with consolidated revenue of €750 million or more. Groups meeting the revenue test in at least 2 of the previous 4 accounting periods. Multinational Top-up Tax is the UK's income inclusion rule and undertaxed profits rule; Domestic Top-up Tax is a domestic minimum tax.
In-scope groups must register for Pillar Two top-up taxes no later than 6 months after the end of the first accounting period in which they meet the criteria, even if no top-up tax is due. One filing member registers for the whole group.
Statutory accounts must be prepared under either International Financial Reporting Standards or UK Generally Accepted Accounting Practice. UK companies' statutory accounts.
A private company can claim audit exemption if it meets at least two of: turnover of no more than £15 million, balance sheet total of no more than £7.5 million, and 50 or fewer employees on average. Financial years beginning on or after 6 April 2025 (previously £10.2 million turnover and £5.1 million assets). Not available to public companies (unless dormant), most subsidiaries without the subsidiary exemption, banks, insurers, e-money issuers, MiFID firms or companies with shares on a regulated market; shareholders holding 10% can require an audit.
Questions on this topic
15 statements on tax, accounting and statutory reporting in the United Kingdom
