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Accounting
Corporation Tax
Tax charged on a company's taxable profits for the financial year.
Corporation tax is calculated after adjusting accounting profit for tax rules (disallowed expenses, capital allowances, etc.). Companies must file and pay within strict deadlines or face penalties.
It's the government's share of the profit the company made after all allowable expenses.
Real world: A UK limited company makes £500,000 profit. At the current 25% rate it owes £125,000 in corporation tax. The tax expense is recorded in the accounts even if payment is made later.
💡 Corporation tax is the main tax most businesses worry about every year.