Accounting & Tax Compliance in United Kingdom

How accounting and tax compliance work in United Kingdom

The United Kingdom applies a 25% main rate of corporation tax on profits above £250,000, with a 19% small profits rate below £50,000 and marginal relief tapering the effective rate between the two bands — a structure unchanged for the 2026/27 financial year, but one where profit within the marginal band is taxed at an effective rate of approximately 26.5% on each additional pound, higher than either headline rate. VAT is charged at a standard 20%, with a £90,000 registration threshold — among the more straightforward tax regimes across HTLC's country practices.

Operating in the UK combines a corporation tax structure with a punitive marginal band between £50,000 and £250,000 profit with a post-Brexit immigration regime that now checks salary compliance pay period by pay period rather than annually.

Rate structure and what it applies to

25% main rate (profits > £250,000) · 19% small profits rate (profits < £50,000) · marginal relief between the two (effective ~26.5% at the margin)

• Sponsor licence required for every non-UK hire — — including EU nationals, who lost automatic right to work when free movement ended on 1 January 2021; without a licence there is no legal route to employ them
• Per-pay-period salary check from 8 April 2026 — — sponsors must show the Skilled Worker salary threshold is met in each pay period, not as an annual average, closing the gap that bonus- or commission-weighted packages previously used
• Marginal relief band (£50,000–£250,000 profit) — — the effective corporation tax rate on income within this band reaches approximately 26.5%, higher than either the 19% or 25% headline rates, making profit-timing genuinely consequential near the boundary
• Audit exemption thresholds — effective from 6 April 2025 — small company: turnover < £15M, gross assets < £7.5M, < 50 employees (2 of 3 criteria, in both the current and preceding financial year)

Rates that apply in United Kingdom

UK GAAP (FRS 102), or IFRS for larger and listed entities, and when an audit is required

Statutory bookkeeping in United Kingdom follows UK GAAP (FRS 102), or IFRS for larger and listed entities. Statutory audit exemption for small companies meeting 2 of 3 thresholds in both the current and preceding year: turnover < £15M, gross assets < £7.5M, < 50 employees (thresholds effective from 6 April 2025).

Annual accounts and registration

Corporation Tax (CT600) payment due within 9 months and 1 day of the accounting period end; the CT600 return itself due within 12 months of the period end — two separate deadlines.

Entity registration runs through the Companies House, with separate HMRC registration for Corporation Tax required within 3 months of starting to trade, typically taking 24 hours for standard online incorporation; 8–10 days by post.

Frequently asked questions