HMRC’s latest Corporation Tax statistics show that receipts from corporate taxes passed £100 billion for the first time in 2025-26.

The main statistics are as follows:

• Total receipts from all corporate taxes were £100.4 billion in 2025-26, an increase of £3.5 billion (4%) compared with the previous year. The total includes Corporation Tax together with the Bank Levy, Bank Surcharge, Residential Property Developer Tax, Energy Profits Levy and Electricity Generator Levy.
• Onshore Corporation Tax receipts were £92.9 billion, up £3.9 billion (4%), while offshore Corporation Tax receipts increased by £0.2 billion to £2.2 billion.
• Financial and insurance activities were the largest contributor to Corporation Tax receipts, generating £25.3 billion, or 27% of the total. Wholesale and retail trade contributed £9.5 billion and professional, scientific and technical activities £8.6 billion.
• Corporation Tax liabilities increased by £4.5 billion (5%) to £87.9 billion in 2024-25. HMRC says the increase was mainly attributable to the full implementation of the 25% main Corporation Tax rate.
• Around 7,670 companies had Corporation Tax liabilities of more than £1 million in 2024-25. Although these represented only 0.5% of companies with an amount of tax to pay, they accounted for 60% (£52.7 billion) of total Corporation Tax liabilities.
• In contrast, around 1.1 million companies had liabilities of less than £10,000, accounting for 4% (£3.4 billion) of the total.
• Total capital allowances claimed, after balancing charges, were £155 billion in 2024-25, down £11 billion (7%) from the previous year.

HMRC has been consulting on proposals to modernise the tax rules governing distributions and repayments of capital from companies. The consultation was published on 23 June 2026 and closed on 14 September 2026.

The proposals look at the treatment of ‘new consideration’ and ‘repayments of capital’, distributions from non-UK companies and the interaction between the distributions and loans to participators regimes. They also include reforms to demergers, Purchase of Own Shares (POS) relief and the Transactions in Securities (TIS) rules. The consultation focuses on situations where the shareholder is within the charge to Income Tax. The proposals are not intended to directly affect corporate shareholders.

Currently, where a company carries out a reduction or return of share capital, the amount received by a shareholder is generally treated as a distribution to the extent it exceeds the capital originally contributed. However, existing rules allow for various arrangements usually involving holding companies and share reorganisations to extract value while paying CGT rather than Income Tax.

HMRC proposes to address this by ‘freezing’ the amount of capital attributed to shares in future holding companies at the amount originally subscribed for the investment. This could mean that more of a payment from a share buyback or other return of capital is treated as a taxable distribution rather than a capital receipt. The government recognises that the proposal might potentially lead to unfair outcomes in certain circumstances.

Concerns have been raised by parties including the ICAEW about the potential impact on companies of the proposed changes, including those relating to reductions of share capital. HMRC will analyse the consultation responses before deciding whether to proceed and may consult further on specific reforms.

A limited company usually pays Corporation Tax on the profit, known as a chargeable gain, when it sells or otherwise disposes of a business asset.

Business assets can include land and property, equipment & machinery and shares. The rules also apply to most unincorporated associations and foreign companies with a UK branch or office. Sole traders and business partners usually pay Capital Gains Tax instead when they sell business assets.

To calculate a chargeable gain, companies normally deduct the amount originally paid for an asset from its sale proceeds. Certain costs associated with buying, selling or improving the asset, such as legal fees and Stamp Duty, can also be deducted. Market value may need to be used where an asset is given away or sold for less than its market value in order to benefit the buyer.

For assets acquired before December 2017, companies can usually use the Indexation Allowance to reduce the gain for inflation up to December 2017. The allowance does not apply to disposals after December 2017 for the period after that date.

Capital losses can generally be deducted from chargeable gains but cannot be used to reduce trading income or other profits. Losses may also be restricted where capital allowances have been claimed. Different rules apply to intangible assets such as intellectual property and goodwill. 

The rate of Corporation Tax payable depends mainly on the level of a company’s taxable profits. The main rate is 25% and applies where profits exceed £250,000. Companies with profits of £50,000 or less generally pay Corporation Tax at the small profits rate of 19%. But note, these two thresholds will reduce if a company has associated companies.

The position is more complicated for companies with profits between these two thresholds. Where profits are between £50,000 and £250,000, Corporation Tax is charged at the 25% main rate, but marginal relief reduces the overall amount of tax payable. Accordingly, the effective rate increases gradually as profits rise, rather than jumping immediately from 19% to 25%.

This means that a company whose profits are just above £50,000 will not suddenly pay 25% Corporation Tax on all its profits but if there are profits are close to £250,000 they will pay tax at almost the 25% rate. In this way, the marginal relief results in a smoother transition between the two rates. 

Corporation Tax is initially calculated at the main rate of 25%, with marginal relief then deducted to arrive at the final liability. The relief is calculated using a standard fraction of 3/200.

Companies should check which rate applies when preparing their Corporation Tax calculation, particularly where profits are close to either threshold.

The thresholds can be affected by the number of associated companies, so a company should not assume that its profit figure alone determines the applicable rate. It is important to ensure that the correct amount of Corporation Tax is paid.
 

A company does not have to be formally closed to become dormant for Corporation Tax. A company is usually considered dormant if it has stopped trading and has no other income, such as investment income.

A new limited company that has not yet started trading can also be dormant for Corporation Tax. Other examples include certain flat management companies and unincorporated associations or clubs owing less than £100 in Corporation Tax.

It is important to understand what counts as trading. For this purpose, activities can include buying or selling, renting property, advertising, employing someone or receiving interest. A company therefore needs to consider its activities carefully before assuming that it is dormant.

If a company has stopped trading and has no other income, it can tell HMRC that it is dormant for Corporation Tax. If HMRC has already issued a notice to deliver a Company Tax Return, the company must still file a return showing that it is dormant for the relevant period.

Once HMRC has been told that a limited company is dormant, it generally does not have to pay Corporation Tax or file further Company Tax Returns unless HMRC issues another notice.

Being dormant for Corporation Tax does not remove the company's Companies House obligations. A limited company must still file its annual accounts and confirmation statement.

If the company is VAT registered and does not intend to trade again, it must deregister for VAT within 30 days of becoming dormant. If it plans to restart trading, it must continue submitting nil VAT returns.

Dormant status should therefore be reviewed carefully, particularly when a company stops trading but continues to have financial activity.

Companies and other organisations that are liable for Corporation Tax must ensure they register with HMRC at the correct time. Failing to register when required could result in missed filing obligations and potential penalties.

Most limited companies can register for Corporation Tax when they are first incorporated at Companies House. If Corporation Tax was not set up during incorporation, the company will need to add Corporation Tax services in its business tax account.

A company usually needs to register for Corporation Tax when it becomes active for Corporation Tax purposes. This can include starting a trade or professional activity, providing services, buying and selling goods for profit, earning interest, managing investments or receiving any other income.

Companies that are within the charge to Corporation Tax must tell HMRC within three months of the start of their Corporation Tax accounting period that they are active.

It is important to remember that a newly incorporated company may not immediately have Corporation Tax obligations if it is dormant. A dormant company does not generally pay Corporation Tax, although it must still meet any Companies House filing requirements.