Corporation tax is a levy on a company’s taxable profits within a specific period. In the UK, all companies are subject to corporation tax on their worldwide profits. The rate and rules vary depending on the business’s size, type, and location. Taxable profits include trading profits, investment income, and chargeable gains.

Example: A consultancy firm earns £500,000 in profits and issubject to a 19% corporation tax, resulting in a tax bill of £95,000. The company can deduct allowable business expenses, like salaries and rent, fromits revenue to calculate taxable profits, reducing its overall tax liability.

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