A limited company in the UK pays business tax in several separate chunks: corporation tax on its profits, VAT once turnover passes £90,000, PAYE and employer National Insurance if it has staff, and dividend tax when directors take money out as dividends. This guide gives you every rate, deadline and a worked example for 2026/27.
If you are still at the starting line, our step-by-step guide explains how to register a limited company in the UK. Once the company exists, the taxes below are what you need to plan for.
Business tax at a glance: the 5 taxes a limited company can face
Not every company pays all five. A one-person company with no staff and turnover under £90,000 may only pay corporation tax and dividend tax. Add staff or cross the VAT threshold and the list grows.
| Tax | What it is charged on | 2026/27 headline rate |
|---|---|---|
| Corporation tax | Company profits | 19% up to £50,000; 25% over £250,000 |
| VAT | Taxable sales once registered | 20% standard rate; £90,000 threshold |
| PAYE income tax | Employee and director salaries | Collected through payroll |
| Employer National Insurance | Staff pay above £5,000 a year | 15% |
| Dividend tax | Dividends paid to shareholders | 10.75% / 35.75% / 39.35% |
1. Corporation tax: the main business tax
Corporation tax is charged on your company’s taxable profits — broadly, income minus allowable business expenses. The rates for 2026/27, confirmed in the GOV.UK corporation tax rates table, are:
| Taxable profits | Rate |
|---|---|
| Up to £50,000 | 19% (small profits rate) |
| £50,001 to £250,000 | Marginal relief — effective rate rises from 19% to 25% |
| Over £250,000 | 25% (main rate) |
Marginal relief smooths the jump between the two rates. The limits are shared between associated companies and reduced for accounting periods shorter than 12 months, so a company with a sister company does not get the full £50,000 band twice.
Worked example: corporation tax on £60,000 and £100,000 of profit
Take a company with £60,000 of taxable profit. It pays the 25% main rate (£15,000) minus marginal relief of (£250,000 − £60,000) × 3/200 = £2,850, giving a bill of £12,150 — an effective rate of 20.25%. On £100,000 of profit the same maths gives £25,000 minus £2,250 of relief = £22,750. A company with £40,000 of profit sits under the small profits limit and simply pays 19%, or £7,600.
2. VAT: only once turnover passes £90,000
You must register for VAT when your taxable turnover passes £90,000 in any rolling 12-month period, and you must register within 30 days of passing it. Once registered, you normally charge 20% VAT on your sales and reclaim the VAT on your business purchases. Voluntary registration below the threshold can make sense if your customers are mostly VAT-registered businesses, because you can reclaim VAT on your costs. If your customers are ordinary consumers, registration usually just adds 20% to your prices, so most small firms wait until they must register.
3. PAYE and employer National Insurance: the cost of having staff
When your company pays a salary, it must run PAYE: deducting income tax and employee National Insurance from pay and sending it to HMRC each month, along with an employer National Insurance charge of 15% on pay above £5,000 a year per employee. For example, one employee paid £30,000 costs the company £3,750 a year in employer National Insurance (15% of £25,000). Eligible employers can offset up to £10,500 a year through the Employment Allowance, which covers the employer charge on £70,000 of pay above the threshold — although a company with only one director-employee normally cannot claim it.
4. Dividend tax: the tax on taking profits out
After corporation tax, the remaining profit can be paid to shareholders as dividends. Each person gets a £500 dividend allowance taxed at 0%. Above that, 2026/27 dividend rates are 10.75% in the basic-rate band, 35.75% in the higher-rate band and 39.35% in the additional-rate band. The basic and higher rates rose by 2 percentage points on 6 April 2026, so last year’s figures no longer apply.
Worked example: a director takes a £12,570 salary and £30,000 in dividends. Dividend tax is charged on £29,500 (after the £500 allowance). Because total income of £42,570 sits inside the basic-rate band, the whole amount is taxed at 10.75%, giving a dividend tax bill of £3,171. The company has already paid corporation tax on the profit behind those dividends, which is why the salary-plus-dividend mix still needs careful planning with an accountant.
5. Other business taxes to watch
Depending on what your company does, a few more charges can appear: business rates on commercial premises, Class 1A National Insurance on employee benefits such as company cars, and the apprenticeship levy (0.5% of the pay bill) for employers with an annual pay bill over £3 million. None of these apply to most small companies, but check them before signing a lease or offering benefits.
Business tax deadlines for 2026/27
| Obligation | Deadline |
|---|---|
| Corporation tax payment | 9 months and 1 day after the end of the accounting period |
| Company tax return (CT600) | 12 months after the end of the accounting period |
| VAT return and payment | Usually quarterly, 1 month and 7 days after the quarter ends |
| PAYE payments | Monthly, by the 22nd of the following month (electronic payment) |
| Personal tax return for dividends | 31 January after the tax year ends |
Missing the corporation tax payment deadline triggers interest, and late filing brings automatic penalties, so diarise both dates separately — they are three months apart and easy to confuse.
How to cut your business tax bill legally
- Claim every allowable expense. Office costs, software, travel, professional fees and marketing all reduce taxable profit. Keep receipts and a simple monthly bookkeeping habit.
- Use the Employment Allowance if you qualify. Up to £10,500 off employer National Insurance is the single biggest saving for a small employer.
- Time large purchases sensibly. Buying equipment before your year-end brings the tax relief a year earlier.
- Pay into a pension. Employer pension contributions are usually an allowable expense and do not attract employer National Insurance.
- Do not mix personal and company money. Unrecorded drawings create tax headaches later; pay yourself by salary and properly declared dividends.
FAQ
What is business tax for a limited company?
Business tax is the umbrella term for the taxes a limited company pays: mainly corporation tax on profits, plus VAT, PAYE and employer National Insurance where relevant, and dividend tax for shareholders who take profits out.
How much business tax does a small limited company pay?
A company with £40,000 of profit pays £7,600 in corporation tax at 19%. On £100,000 of profit the bill is £22,750 after marginal relief. VAT, payroll taxes and dividend tax are charged on top where they apply.
When does a limited company pay corporation tax?
Corporation tax must be paid 9 months and 1 day after the end of your accounting period, and the company tax return (CT600) must be filed within 12 months of the period end.
Do I pay business tax if my limited company makes no profit?
No corporation tax is due on zero profit, but you must still file a company tax return, and PAYE, VAT and filing obligations continue if they apply to you.
Conclusion
Business tax for a limited company is not one bill but a stack: corporation tax first, then VAT, payroll taxes and dividend tax as your company grows. Learn the thresholds — £50,000 and £250,000 for corporation tax, £90,000 for VAT, £5,000 for employer National Insurance and £500 for dividends — and most of the surprises disappear. Set money aside monthly for each tax, diarise the two corporation tax dates, and get an accountant’s eyes on your salary-versus-dividend mix once profits pass £50,000. That is how a small company keeps its tax bill legal, predictable and as low as the rules allow.
