Corporation tax - What is corporation tax?

Definition: A corporation tax is a tax placed on the taxable profits of limited companies and other organisations such as clubs, societies, associations and other unincorporated entities.

A corporation tax is placed on the taxable profits of a company or organization. Taxable profits include profits from taxable income (such as trading or investment profits) and capital gains (also known as chargeable gains).

Who must pay this tax?

Companies and organizations based in the United Kingdom must pay a corporation tax on all taxable profits, no matter where (in the world) the profits came from.

If a company operates in the UK but isn’t based there (e.g. operates through an office or branch) then the corporation tax only needs to be paid on taxable profits that arise in the UK.

Learn more on the HM Revenue and Customs website.