Corporation tax,
without the shock.

What does a company pay corporation tax on?

On its taxable profit: trading income, plus investment income and chargeable gains, less allowable expenses and capital allowances. Not on turnover, and not only on money you take out — retaining profit does not defer the company's tax on it.

Directors' salaries and employer National Insurance are deductible, so they reduce the profit the company is taxed on. Dividends are not — they are paid out of profit that has already been taxed, which is the whole reason the salary and dividend split is a decision at all.

What rate does a small company pay?

There is a small profits rate for companies with low profits, a main rate for large ones, and marginal relief tapering between the two — so a company in the middle band pays an effective rate somewhere between the headline figures.

The thresholds are divided if you have associated companies, which catches people who own more than one. Two companies each earning modestly can find themselves in the marginal band because the limits are shared between them.

The rates and thresholds are set at each Budget and have changed materially in recent years. Check the current figures on gov.uk rather than working from a number you remember.

When is corporation tax actually due?

For most small companies, payment is due nine months and one day after the end of the accounting period — while the return itself is not due until twelve months after. The payment deadline lands before the filing deadline, which surprises people every year.

So a company with a 31 March year end pays by 1 January and files by the following 31 March. Larger companies pay in quarterly instalments instead.

The practical consequence: you need to know the number months before the return is prepared. Books that are current tell you; books reconstructed in February do not.

What reduces the bill legitimately?

• —Capital allowances on plant, machinery, tools and equipment — including the annual investment allowance, and full expensing for qualifying new plant.
• —Employer pension contributions, usually deductible in the period paid rather than accrued.
• —Directors' and employees' salaries, and the employer National Insurance on them.
• —Genuine costs people forget to claim: use of home under a proper agreement, mileage at the approved rates, professional subscriptions.
• —Research and development relief, if the company is genuinely resolving technical uncertainty — the rules tightened considerably, and a weak claim now costs more than it returns.
• —Trading losses, which can be carried back or forward within the rules.

What does not reduce it?

• —Dividends. They come out of taxed profit — paying yourself more in dividends does not lower the company's bill.
• —Client entertaining, which is a real cost and specifically not deductible.
• —Fines and penalties, including late filing penalties the company incurred itself.
• —Depreciation in the accounts, which is added back and replaced by capital allowances.
• —Buying something you do not need in March. The relief is a fraction of the cost; the cash is all of it.

How does Bizzle keep the number visible?

The corporation tax position builds as the year goes, from a ledger reconciled daily rather than assembled at the end. You see the liability accruing while there is still time to make a decision about a pension contribution or an equipment purchase that actually makes sense.

Capital purchases are flagged as capital rather than swept into general costs, so allowances are not quietly missed. Filing dates for the return, the payment and the confirmation statement sit on one calendar.

Your accountant works from the same live file with their own free login, so the year-end conversation starts from agreed figures instead of a reconciliation.