Tax and compliance in United Kingdom

Snapshot

A UK business meets a few core tax duties: corporation tax for companies, VAT once turnover passes the threshold, and digital record keeping under Making Tax Digital. The corporation tax main rate is 25 percent and the small profits rate is 19 percent, the VAT registration threshold is 90,000 pounds of taxable turnover in a rolling 12 months, and Making Tax Digital for Income Tax starts from April 2026 for higher income sole traders and landlords. As of 19 January 2026.

Corporation tax: Main rate 25 percent, small profits rate 19 percent, marginal relief between. As of 19 January 2026.
VAT registration: Required above 90,000 pounds rolling 12 month taxable turnover.
Making Tax Digital: VAT records are digital now; Income Tax from April 2026 above 50,000 pounds.
Always: This is general information, not tax advice. Confirm with HMRC or an accountant.

Fees and features as of 19 January 2026Last reviewed 19 January 2026

General information, not financial, legal, or tax advice. Verify current terms and eligibility with the provider before applying.

As of 19 January 2026, a UK business faces a small set of core tax and compliance duties. A limited company pays corporation tax, with a main rate of 25 percent on profits above 250,000 pounds and a small profits rate of 19 percent on profits up to 50,000 pounds, and marginal relief in between. Any business must register for VAT once taxable turnover passes 90,000 pounds in a rolling 12 month period, and VAT registered businesses keep digital records and file returns under Making Tax Digital. Making Tax Digital for Income Tax begins from April 2026 for self employed people and landlords with qualifying income over 50,000 pounds. None of this is tax advice, so confirm the figures and what applies to you with HMRC or an accountant.

Core tax duties for a business in United Kingdom

The duties depend on the structure. A limited company files accounts and a confirmation statement with Companies House and pays corporation tax to HMRC on its profits. A sole trader reports profits through Self Assessment. On top of that sit VAT, where turnover requires it, and payroll duties if the business has employees. As of 19 January 2026, the headline rates and thresholds below are a starting point, not a complete return, so use HMRC guidance or an accountant for your own position.

Corporation tax rates

For the financial year that began on 1 April 2026, the main rate of corporation tax is 25 percent on profits above the upper limit of 250,000 pounds, and the small profits rate is 19 percent on profits up to the lower limit of 50,000 pounds. Profits between those limits are taxed with marginal relief, which tapers the rate between the two, and these limits can be reduced where a company has associated companies. As of 19 January 2026, confirm the current rates with HMRC.

VAT and the registration threshold

A business must register for VAT once its taxable turnover exceeds 90,000 pounds in any rolling 12 month period, and it must tell HMRC within 30 days of the end of the month in which the threshold was passed. The deregistration threshold is 88,000 pounds. A business below the threshold can register voluntarily, which can suit one that reclaims input VAT. As of 19 January 2026, confirm the current thresholds with HMRC.

Making Tax Digital and records

Making Tax Digital requires VAT registered businesses to keep digital records and file VAT returns through compatible software. Making Tax Digital for Income Tax begins from April 2026 for self employed people and landlords whose qualifying income is over 50,000 pounds, who will keep digital records and send quarterly updates. There is no Making Tax Digital mandate for corporation tax yet. As of 19 January 2026, confirm what applies to you with HMRC.

How a business account helps

Points to weigh on records and compliance, as of 19 January 2026. Confirm with HMRC or an accountant

A dedicated business account keeps business and personal money separate, which makes bookkeeping and returns clearer.
A limited company must hold its money in its own account, not a personal one.
Accounts that link to accounting software can speed up Making Tax Digital record keeping and VAT returns.
Keeping statements and receipts in order supports an accurate corporation tax or Self Assessment return.

Compare business accounts available in United Kingdom

These providers accept business customers in the United Kingdom, and several link to accounting software. Fees and eligibility shown as of 19 January 2026. Confirm current terms with the provider before applying.

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Questions about tax and compliance in United Kingdom

What is the corporation tax rate in the United Kingdom?

For the financial year that began on 1 April 2026, the main rate of corporation tax is 25 percent on profits above 250,000 pounds, and the small profits rate is 19 percent on profits up to 50,000 pounds. Profits between those limits are taxed with marginal relief. Confirm current rates with HMRC or an adviser, as of 19 January 2026.

When must a UK business register for VAT?

A business must register for VAT when taxable turnover exceeds 90,000 pounds in any rolling 12 month period, and it must notify HMRC within 30 days of the end of the month in which the threshold was passed. The deregistration threshold is 88,000 pounds. You can also register voluntarily below the threshold. As of 19 January 2026, confirm the current figures with HMRC.

What is Making Tax Digital and does it apply to my business?

Making Tax Digital requires VAT registered businesses to keep digital records and file VAT returns using compatible software. Making Tax Digital for Income Tax begins from April 2026 for self employed people and landlords with qualifying income over 50,000 pounds. There is no Making Tax Digital mandate for corporation tax yet. Confirm what applies to you with HMRC, as of 19 January 2026.

Does a business account help with tax and compliance?

A dedicated business account keeps business income and spending separate from personal money, which makes bookkeeping, VAT returns, and accounts simpler and clearer. A limited company must keep its money in its own account. A business account is not tax advice, so use an accountant or HMRC guidance for your situation, as of 19 January 2026.

Fees, features, and eligibility change and vary by region. This page was last reviewed on 19 January 2026. Confirm current terms with the provider before applying.