Navigate UK Corporation Tax with Confidence

Chosen theme: Guidance on Corporation Tax for UK Startups. Welcome to a founder-friendly space where we turn complex rules into clear steps, share real stories, and help you make smart, timely decisions that protect your runway.

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Getting Registered: Know When You’re Officially ‘Trading’

The 3‑Month Rule, Explained Simply

You must register for Corporation Tax within three months of starting to trade—typically when you begin sales or active marketing. Many founders miss this because early activity feels like testing, but HMRC often sees it as trading.
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UTR, Government Gateway, and Going Digital

Expect a letter with your company’s Unique Taxpayer Reference after incorporation. Set up your Government Gateway account early, link Corporation Tax, and keep logins secure so filings and payments never hinge on one person.
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A Founder’s First Trading Day

When Aisha in Manchester invoiced her first pilot customer, she assumed it was a trial. HMRC didn’t. She registered immediately, avoided penalties, and now reminds new founders: trading often starts before you feel ready.
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Rates, Thresholds, and Associated Companies

Small Profits, Main Rate, and the Middle Ground

As a guide, small profits can be taxed at a lower rate, higher profits at the main rate, and marginal relief may apply between thresholds. Always check current HMRC thresholds before forecasting or setting dividends.

Associated Companies: Hidden Threshold Shifters

If your company controls or is controlled by other entities, thresholds may be apportioned across associated companies. This can nudge you into marginal or main rates sooner than expected, so map your group early.

Forecast to Avoid Nasty Surprises

Build simple quarterly forecasts with best, base, and worst cases. Model different profit levels and associated company counts, then plan salary, investments, and timing decisions around how rates and reliefs change.

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Allowable vs. Disallowable: Spending That Truly Reduces Tax

Costs must be incurred solely for your trade. Salaries, software subscriptions, and hosting typically qualify. Mixed‑use items demand careful apportionment. Keep notes on purpose and benefit when you book expenses.
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Allowable vs. Disallowable: Spending That Truly Reduces Tax

Client entertainment is generally disallowed for Corporation Tax. Fines and penalties aren’t deductible either. Train your team, tag these costs separately, and avoid relying on guesswork when margins are tight.

Capital Allowances and Full Expensing

AIA offers 100% relief on qualifying expenditure up to a generous annual limit. It’s straightforward, fast, and ideal for early equipment purchases that underpin product development or operations.

Capital Allowances and Full Expensing

Full expensing can give immediate relief on the cost of qualifying main‑rate assets. Plan purchases around cash flow and delivery dates so relief lands in the right accounting period for your runway.

Losses, R&D, and Smart Relief Strategies

Losses: Carry Back or Carry Forward

Trading losses can sometimes be carried back to prior profits for a refund or carried forward to offset future profits. Model both routes, factoring cash needs and projected profitability turning points.

Group Relief: Value Within a Portfolio

If you’re in a group, profits and losses may be shared to reduce overall Corporation Tax. Maintain clear ownership charts and intercompany agreements so claims are supported and audit‑ready.

R&D Relief: Keep Documentation Tight

R&D incentives can reduce Corporation Tax or generate credits, but rules and rates evolve. Track projects, uncertainties, and technical narratives from day one, and review HMRC updates or seek specialist advice.
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