Corporation Tax in Burnley: Rates, Deadlines, and Penalties

If you run a limited company in Burnley, corporation tax on your taxable profits is paid to HMRC at 19% on profits up to £50,000, 25% on profits above £250,000, and a tapered effective rate in between. Payment is due nine months and one day after your accounting period ends; the CT600 return follows three months after that. Several rules changed in 2026, and they affect penalties, capital allowances, and director’s loans in ways worth checking before your next year-end.

Who Has to Pay

Corporation tax applies to any limited company registered or operating in the UK, wherever the business is based. It also catches cooperatives, community groups, sports clubs, and other unincorporated associations that generate a surplus. A foreign company with a UK branch or office pays only on profits generated through that UK presence.1GOV.UK. Corporation Tax

Taxable profits include trading income, investment returns, and gains from selling assets for more than they cost.1GOV.UK. Corporation Tax You must register your company for corporation tax within three months of it becoming active, meaning it starts trading, receives taxable income, or buys and sells assets. Miss that window and penalties can arrive before you’ve filed anything.

Rates and Thresholds

The rate depends on your profit band:

  • Small profits rate of 19% on taxable profits of £50,000 or less.
  • Main rate of 25% on taxable profits above £250,000.
  • Marginal relief between £50,000 and £250,000, which lifts the effective rate gradually from 19% to 25% rather than jumping at the threshold.2GOV.UK. Corporation Tax Rates, Expenses and Reliefs

Associated Companies Shrink the Bands

If you control more than one company, the £50,000 and £250,000 thresholds are divided by the total number of associated companies, including the one filing. A director with three other associated companies divides by four, so the small profits threshold falls to £12,500 and the upper limit to £62,500.3GOV.UK. Marginal Relief for Corporation Tax Work out your own effective thresholds before assuming 19% applies.

The Two Deadlines

Corporation tax has separate payment and filing deadlines, and mixing them up is a common and expensive mistake.

So if your accounting period ends on 31 March 2026, payment is due by 1 January 2027 and the return by 31 March 2027. The money moves first. Direct Debit is the simplest way to avoid slipping past the payment date, especially when your year-end doesn’t fall on a memorable calendar date.

What Late Filing and Late Payment Cost in 2026

From 1 April 2026, the flat-rate late filing penalties are:

  • £200 if the return is up to three months late.
  • £400 if more than three months late.
  • £1,000 for a third consecutive late return that is up to three months late.
  • £2,000 for a third consecutive late return that is more than three months late.

These apply even if the company owes no tax. On top of them, a tax-related penalty of 10% of the unpaid tax kicks in once a return is 18 months overdue, rising to 20% if the return is filed more than two years after the period end.6GOV.UK. Corporation Tax Penalty Determinations CT211 Notes

Late payment of the tax itself attracts interest rather than a fixed penalty, currently 7.75%.7GOV.UK. HMRC Interest Rates for Late and Early Payments That compounds quickly, so even a modest bill paid late gets expensive.

Capital Allowances After the 2026 Changes

Accounting depreciation is not deductible from taxable profits. Capital allowances are how you get relief on equipment, vehicles, and machinery instead, and two of the main routes remain generous.

Annual Investment Allowance

The Annual Investment Allowance (AIA) lets you deduct the full cost of qualifying plant and machinery up to £1,000,000 per year.8GOV.UK. Claim Capital Allowances – Annual Investment Allowance Most small businesses will never approach that ceiling, so in practice the cost of equipment purchased in the year is written off in that same year.

Full Expensing

Full expensing lets companies deduct 100% of qualifying expenditure on new main-rate plant and machinery in the year of purchase. It is now permanent, after the government removed the original April 2026 sunset date.9GOV.UK. Permanent Full Expensing for Companies Investing in Plant and Machinery It is only available to companies within the charge to corporation tax, so sole traders and partnerships use the AIA instead.

The April 2026 Rate Changes

A new 40% first year allowance applies to qualifying expenditure incurred from 1 January 2026 onward. The main writing down allowance on plant and machinery fell from 18% to 14% from 1 April 2026.10GOV.UK. New First-Year Allowance and Main Rate of Writing-Down Allowances Accounting periods straddling 1 April 2026 use a hybrid rate based on days before and after the change. Assets sitting in the general pool now depreciate for tax purposes more slowly, so claiming AIA or full expensing up front is worth more by comparison.

R&D Tax Relief

Money spent on research and development can attract additional relief through the merged R&D expenditure credit scheme, which replaced the separate SME and large company schemes for accounting periods starting on or after 1 April 2024. The credit rate is 20% of qualifying R&D expenditure.11GOV.UK. The Merged R&D Expenditure Credit Scheme and Enhanced R&D Intensive Support The work has to involve seeking an advance in science or technology, not routine product improvement, and the credit itself is taxable, so the net benefit is below the headline rate.

Director’s Loans and the Section 455 Charge

If you’re a director who borrows from your own company, an unpaid loan triggers a separate tax charge if it isn’t repaid within nine months and one day of the company’s year end. This section 455 charge rose to 35.75% of the outstanding balance for loans made on or after 6 April 2026, up from 33.75%. The company pays it alongside its corporation tax, and HMRC only refunds it once the loan is repaid or written off.

The trap is timing. Owner-directors often draw funds through the year without tracking the running balance, then find at year-end that they owe the company a significant sum. If cash flow won’t stretch to repayment inside the window, the 35.75% charge roughly doubles the cost of the borrowing. Taking withdrawals as salary or dividends usually works out cheaper, although the right mix depends on your wider tax position.

Records You Have to Keep

Company financial records must be kept for at least six years from the end of the financial year they relate to.12GOV.UK. Company and Accounting Records The period stretches beyond six years if:

  • The records relate to equipment or machinery expected to last more than six years.
  • The records cover a transaction spanning more than one accounting period.
  • You filed the Company Tax Return late.
  • HMRC has opened a compliance check into the return.

Digital copies of invoices, bank statements, and receipts held for at least seven years cover most situations at negligible cost.12GOV.UK. Company and Accounting Records