UK Corporation Tax Calculator

The corporation tax calculator allows companies in the UK and companies based outside the UK with offices or branches in the UK to calculate their corporation tax based on their companies financial year or using a standard tax year, the 2019 tax year for example runs from the 1st April 2019 to the 31st March 2020. The corporation tax calculator is useful for calculating corporation tax due in previous financial years and for forecasting corporation tax due in the next financial year, this is particularly important when producing financial forecasts and planning sufficient withholding to pay for the corporation tax bill when it is due.

UK Corporation Tax Calculator

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How do I calculate UK Corporation Tax?

This image shows details about corporation tax calculation in the UK including finance and tax formula used to calculate corporation tax in the UK as integrated in the UK Corporation Tax Calculator 2019/20

Corporation tax is very straightforward to calculate since 2015. Before 2015, calculating corporation tax meant applying different rates and thresholds depending on your companies situation and annual profits. In 2015, the UK tax laws surrounding corporation tax were simplified and a flat rate scheme adopted. This has made it easier for companies to measure their corporation tax commitments and make corporation tax calculations simpler and therefore easier for companies to comprehend and work with.

If corporation tax is so easy to calculate, why do I need a corporation tax calculator? Although corporation tax uses a simple math formula, it can be complicated somewhat by the fact that most companies have a different financial year to the UK tax year. This means that companies need to calculate exactly how much corporation tax is dues within in tax year, this is particularly important when corporation tax rates change. Miscalculating can mean paying far more corporation tax than is necessary or not paying enough and attracting fines from HMRC. Larger companies will watch fluctuations in corporation tax and declare their profits accordingly. If your profits are not split on a daily pro rata but declared specifically within certain quarters, you can use the profit share slider to override and declare certain profit amount for the desired tax year, note, this is not a legal means of tax avoidance, declaring profits incorrectly is tax evasion. Whilst HMRC will accept a daily pro-rata split, they will expect clear accounting detail to back up profit splits. You cannot simply declare all your profits in one period.

The simplest way to calculate your corporation tax is to use the Corporation Tax Calculator, if you prefer to calculate corporation tax manually or build your own corporation tax excel sheet, the guides below will help you on your way.

How to calculate Corporation Tax based on a Tax Year?

If your companies' financial year is aligned with the UK tax year (1st April to the 31st March), calculating corporation tax is very easy. You will simply need to know your annual profits for the year and the corporation tax for that year, then:

  1. Calculate the total amount of corporation tax due by multiplying the Companies Annual Profit by the corporation tax for the tax year.
  2. [optional] calculate the average corporation tax per day for the company's financial year by dividing the total amount of corporation tax due by the total amount of days within the financial year.

How to calculate Corporation Tax based on a Company's Financial Year

The following steps define how to calculate corporation tax for a company whose financial year is different to the UK's standard tax year

  1. Calculate the number of days in period one. Period one is either:
    1. The number of days that fall between the companies financial year start date and the 31st March 2019 IF the companies financial year starts before the 1st April 2019
    2. The number of days that fall between the companies financial year start date and the 31st 2020 IF the companies financial year starts after the 1st April 2019
  2. Calculate the number of days in period two. Period two is either:
    1. The number of days that fall between the 1st April 2019 and the companies financial year end date IF the companies financial year starts after the 1st April 2019
    2. The number of days that fall between the 1st April 2020 and the companies financial year end date IF the companies financial year starts after the 1st April 2019
  3. Add Period one and period two together to calculate the total amount of days within the financial year.
  4. Calculate the profit per day by dividing the total profits for the company's financial year by the total amount of days within the financial year (NOTE: it is is important to factor for leap year when calculating corporation tax as part of a financial year calculation!)
  5. Calculate the total profit in period one by multiplying the profit per day by the days in period one.
  6. Calculate the total profit in period two by multiplying the profit per day by the days in period two.
  7. Calculate the corporation tax for period one by multiplying the profit in period one by the corporation tax rate for period one.
  8. Calculate the corporation tax for period two by multiplying the profit in period two by the corporation tax rate for period two.
  9. Calculate the total amount of corporation tax due by adding corporation tax for period one to corporation tax for period two.
  10. [optional] calculate the average corporation tax per day for the company's financial year by dividing the total amount of corporation tax due by the total amount of days within the financial year.
  11. [optional] calculate the average corporation tax rate for the company's financial year by dividing the total amount of corporation tax due by the total profit for the company's financial year.