UK Corporation Tax: A Complete Guide for Foreign Directors

Running a UK limited company as a foreign director involves specific tax obligations. Understanding Corporation Tax is essential — non-compliance is costly and easily avoided.

What Is Corporation Tax?

Corporation Tax (CT) is a direct tax on the taxable profits of UK limited companies. Unlike income tax, which is levied on individuals, CT is levied on the company itself. The current CT rates (from April 2023) are:

• Main Rate: 25% on profits over £250,000
• Small Profits Rate: 19% on profits under £50,000
• Marginal Relief: Gradual taper between £50,000–£250,000

Key Deadlines

• Filing the CT600: 12 months after the end of your accounting period
• Paying the CT: 9 months and 1 day after the end of your accounting period

Late filing attracts automatic penalties starting at £100, escalating significantly.

Allowable Deductions

You can reduce your CT liability by deducting all "wholly and exclusively" business expenses, including: salaries, rent and office costs, marketing and advertising, software subscriptions, professional fees, pension contributions, and travel for business purposes. The key test: the expenditure must be for business purposes only.

Personal Tax vs. Company Tax

As a foreign director, your personal UK tax obligations depend on your residency status. If you are not UK tax-resident, you typically won't pay UK income tax on dividends from a UK company — though your home country may tax them. We strongly recommend speaking to one of our accountants for a personal tax assessment based on your specific circumstances and tax treaty position.