Corporate Tax Planning

Corporation Tax is charged on any corporate body, which includes both limited and unlimited companies and also applies to unincorporated associations such as members’ clubs.

A company, which is resident (incorporated at Companies House) in the UK is liable to tax on their worldwide income and gains. Corporation Tax may also apply to non-resident companies as well.


A company will also be deemed resident if it is not incorporated in the UK but its central management and control is based in the UK. Non-resident companies with permanent establishments will also be subjected to UK Corporation Tax payments.

Corporate Tax is payable 9 months and 1 day after the chargeable accounting period for the majority of companies. For Large companies whereby their profits exceed £1.5m they have to pay by instalments. Contact us for more information about corporate tax planning.

From 1 April 2023 the tax rates increase from 19% for those companies that make profits over £50k, incl. Close Investment Holding Companies. The main rate for those with profits of £250k+ is 25% and the marginal rate between £50k to £250k is 26.5%.

Associated companies have also come back into focus and we have written this article regarding them.

The use of Capital Allowances, Reliefs (incl. Research & Development) and Losses in a tax efficient method can often be overlooked by some firms.

Ensuring the Annual Investment Allowance is first allocated against the Special Rate Pool before the General Rate Pool, as well as the use of Short Life Assets in the right way can lead to tax savings at an earlier date, thus helping cash flow. Reliefs such as Rollover Relief, Research & Development and the Patent Box among others can help to defer tax or reduce taxation. The use of losses for non-group companies and creating effective Group Structures to ensure the use of Group losses or Consortium Relief can be made in an effective manner is an important tax planning tool.


Directors Loans and Employee Loans

Employers can provide their employees loans up to £10k a tax year without any tax charge on the business or employee.

Where a loan is provided to a participator such as a Director, Shareholder or connected close family member a tax charge may be created.  This is known as s.455 tax.  This is due when the loan is not repaid within 9 months and 1 day after the year end.  It is refundable, but the timing of this will depend on which accounting period it falls within.

Where a company requires additional cash a participator may wish to loan funds.  Provided the company requires these then any interest payments are deductible for the company and taxable on the lender.

Foreign Subsidiaries

When you set up a business through a permanent establishment in the UK this can be done through a:

  • Subsidiary
  • Branch

We have experience of working with UK companies who are subsidiaries of larger international groups. We can assist your UK operations to ensure that you are fully compliant with the UK taxation legislation and the compliance forms, whilst alerting you to opportunities.