For business owners navigating corporate tax can feel like a maze. But with the right guidance, it’s possible to optimise your tax efficiency, reduce liabilities, and support your business’s long-term financial success.
In this blog, we break down corporate tax planning into manageable steps, offer expert tips, and share the latest UK tax rates and allowances for 2025/26, to help you stay ahead of your obligations.
Why Corporate Tax Planning Matters
Corporate tax planning isn’t just about compliance - it’s about making strategic decisions that enhance profitability and cash flow. Effective planning ensures your business:
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Maximises available reliefs and allowances.
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Reduces exposure to unnecessary tax.
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Stays compliant with HMRC regulations.
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Has more funds to reinvest or distribute.
Neglecting tax planning can lead to missed opportunities and unexpected liabilities that hinder growth.
Key Rates and Allowances - 2025/26
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Corporation tax rate: The main rate is currently 25% for companies with profits over £250,000.
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Small profits rate: For businesses with profits under £50,000, the rate remains at 19%.
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Marginal relief: Applies to profits between £50,000 and £250,000, offering a gradual increase in the effective tax rate.
Understanding where your business falls within these thresholds is crucial for accurate forecasting and effective planning.
Expert Tips for Simplifying Corporate Tax Planning
Outsourcing your payroll gives your business access to domain experts in the world of employee legislation, tax and payroll processing to ensure that you’re getting the maximum value out of your payroll process, which brings a range of benefits.
1. Know Your Deadlines
Corporation tax is due 9 months and 1 day after the end of your accounting period. Filing your company tax return (CT600) is due 12 months after the end of that period. Missing these deadlines can lead to penalties and interest charges, eroding your bottom line.
Tip: Set automated reminders well in advance to ensure you never miss a due date.
2. Leverage Capital Allowances
Capital allowances let you deduct the cost of certain assets from your taxable profits. This includes:
Annual Investment Allowance (AIA): Offers 100% relief on qualifying expenditure up to £1 million per year.
Full expensing: For qualifying plant and machinery investments made from April 2023, providing 100% first-year relief.
Tip: Regularly review your capital expenditure plans with your accountant to maximise these allowances.
3. Utilise Research & Development (R&D) Relief
If your company invests in innovation, you could benefit from generous R&D tax reliefs. This includes activities such as developing new products, processes, or services, or improving existing ones.
Tip: Many businesses overlook R&D relief because they assume their work doesn’t qualify. A tax advisor can help identify eligible projects and unlock valuable reliefs.
4. Consider Group Relief
If your business is part of a group of companies, group relief allows losses to be offset against profits in other group members, reducing the overall tax payable.
Tip: Review your group structure with your accountant to make the most of intra-group reliefs.
5. Optimise Your Profit Extraction Strategy
How you extract profits, via salary, dividends, or pension contributions, can have significant tax implications. Each option is taxed differently, and the optimal mix will depend on your company’s profitability and your personal tax position.
Tip: Work with a tax advisor to design a bespoke profit extraction plan that balances tax efficiency with your personal financial goals.
6. Stay Informed of Legislative Changes
The corporate tax landscape is constantly evolving. For example, changes in rates, allowances, and reliefs like those noted in the HMRC Corporation Tax rates can significantly impact your planning strategy.
Tip: Partner with a proactive accountant who keeps you informed of relevant changes and adjusts your plan accordingly.
Giving you peace of mind
At Haines Watts, we specialise in helping business owners navigate corporate tax complexities. Whether you’re looking to optimise tax efficiency, claim R&D relief, or streamline your accounting processes, our expert team is here to support you every step of the way.
Ready to take the stress out of corporate tax planning? Get in touch with our tax experts today.
