Corporation tax is one of the key responsibilities for any UK company. While it can seem like a dull tangle of rules (and, well, it is), understanding the basics is vital — especially if you’re a small business or limited company based in Cambridge, Nottingham, or anywhere in between.
Here’s what you need to know — in plain English.
What is Corporation Tax?
Corporation tax is charged on the profits of a company, and that includes more than just money from your day-to-day trading. If your Cambridge consultancy makes money from renting a spare office or your Nottingham e-commerce business cashes in on crypto gains, HMRC wants to know about it.
Profits include:
- Trading income
- Property income
- Loan relationships
- Chargeable gains
- Miscellaneous income (the kind that doesn’t quite fit anywhere else)
If your company makes money — it’s probably taxable.
Which Companies Pay Corporation Tax?
If you’re running a limited company in Cambridge or Nottingham, or even an unincorporated association like a club or society, you’re likely within the scope of corporation tax.
Exceptions include partnerships, local authorities, and NHS bodies — so unless you’re running the East Midlands’ most profitable parish council, you’re probably included.
Accounting Periods: Get the Timing Right
Corporation tax is assessed over accounting periods, which usually match your financial year. But if your company changes its year-end, starts or stops trading, or enters administration, things can get messy.
Here’s where many SME’s get tripped up: an accounting period can’t be longer than 12 months. So, if you prepare 18 months of accounts (like some Cambridge start-ups do to align with investment rounds), you’ll need to split profits between two tax periods.
Allocating Profits and Claiming Reliefs
When profits fall across different tax periods, HMRC wants to see a split. Most of the time, you’ll divvy things up based on time. But some items — like capital gains or charitable donations — must be matched to when they actually occurred.
Getting this wrong can lead to penalties or overpaid tax, and no one wants to be that Nottingham business frantically calling HMRC in January.
Why Local Support Matters
Whether you’re launching a tech start-up in Cambridge Science Park or running a long-standing firm in Nottingham’s Creative Quarter, corporation tax applies to you.
At GMS Business Accountants, we help businesses like yours:
- Navigate the UK’s corporation tax rules
- Identify reliefs and allowances
- File on time and avoid penalties
- Keep more of your hard-earned profit
✅ Need help with your company tax return?
Based in Cambridge or Nottingham? Book your no-pressure consultation with GMS Business Accountants today – we’ll sort the tax, so you can get back to business.
