Who needs to pay corporation tax in the UK?
Answered 11 March 2026
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Who Needs to Pay Corporation Tax in the UK?
What the law says
Definition of "company"
For Corporation Tax Act purposes, a "company" means any body corporate or unincorporated association, but does not include a partnership, a co-ownership scheme, a local authority, or a local authority association.
The charge to corporation tax
Corporation tax is charged on the profits (meaning income and chargeable gains) of companies for any financial year for which an Act so provides.
1. UK Resident Companies
A UK resident company is chargeable to corporation tax on income on all its profits wherever arising (subject to an exemption for profits of foreign permanent establishments).
For chargeable gains, a company resident in the United Kingdom is chargeable to corporation tax on chargeable gains accruing to it in an accounting period on the disposal of assets wherever situated.
2. Non-UK Resident Companies
A non-UK resident company is within the charge to corporation tax on income only if it falls into one of the following categories (CTA 2009, s.5(2)):
- (a) It carries on a trade of dealing in or developing UK land (in which case it is chargeable on all profits of that trade wherever arising);
- (b) It carries on a trade in the United Kingdom through a permanent establishment in the UK (chargeable on profits attributable to that permanent establishment);
- (c) It carries on a UK property business (chargeable on profits of that business and related loan relationship/derivative contract profits);
- (d) It has other UK property income.
For chargeable gains, a non-UK resident company is also chargeable to corporation tax on gains accruing on the disposal of:
- UK-situated assets connected to its UK permanent establishment;
- Interests in UK land; or
- Assets (wherever situated) that derive at least 75% of their value from UK land where the company has a substantial indirect interest in that land.
HMRC guidance / practice
- Both UK resident and non-UK resident companies that fall within the Transactions in UK Land rules must notify chargeability and register to pay tax. The normal corporation tax self-assessment regime applies.
- A non-UK resident company dealing in or developing UK land comes within the charge to corporation tax on making a disposal of UK land or property on or after 5 July 2016.
- A Property Authorised Investment Fund (PAIF) is also chargeable to corporation tax, though the regime is designed to allow income to flow through to investors.
Summary Table
| Entity | Basis of charge |
|---|---|
| UK resident company | All worldwide profits (income + gains) |
| Non-UK resident company with UK permanent establishment | Profits attributable to the UK PE |
| Non-UK resident company dealing/developing UK land | All profits of that trade wherever arising |
| Non-UK resident company with UK property business | Profits of that business |
| Non-UK resident company with other UK property income | That income (and related financing profits) |
| Non-UK resident company disposing of UK land interests / land-rich assets | Chargeable gains on those assets |
Citation sources
Part 24 Corporation Tax Acts definitions etc Chapter 1 Definitions “Company” 1121 1 In the Corporation Tax Acts “ company ” means any body corporate or unincorporated association, but does not include a partnership, a co-ownership scheme (as defined by section 235A of the Financial Services and Markets Act 2000), a local authority or a local authority association. 2 Subsection (1) needs to be read with section 617 (under which the trustees of an authorised unit trust are treated for certain purp
Part 1 Capital gains tax and corporation tax on chargeable gains Chapter 2 Corporation tax on chargeable gains Territorial scope Territorial scope of charge to corporation tax on chargeable gains 2B 1 A company which is resident in the United Kingdom in an accounting period is chargeable to corporation tax on chargeable gains accruing to the company in the period on the disposal of assets wherever situated. 2 This is subject to Chapter 3A of Part 2 of CTA 2009 (exemption from charge in respect o
When the Transactions in UK Land rules apply the company or individual's income will be treated as arising from a trade of dealing in or developing UK land. Both UK resident and non-UK resident companies and individuals will need to notify chargeability and register to pay tax. There are no separate filing or payment rules for this legislation. The normal self-assessment regime for income tax and corporation tax will apply. Non-UK resident companies need to register for UK corporation tax using
A non-UK resident company dealing in or developing UK land will come within the charge to corporation tax on making a disposal of UK land or property on or after 5 July 2016. Generally ‘large’ companies must pay their Corporation Tax electronically by quarterly instalments. A large company is one whose profits for the accounting period in question are at an annual rate of more than £1.5 million. An exception to the requirement to pay by instalments for ‘large’ companies exists where the profits
t distributed is a PAIF distribution (dividends) and this income is treated for UK tax purposes as if it is UK dividends. In general, investors will pay approximately the same level of tax as if they had invested directly in the underlying assets. To achieve this a PAIF distributes income to investors in up to three ways as outlined above. The PAIF is chargeable to corporation tax, but the regime enables a PAIF to manage itself in such a way that it should be able to ensure that tax does not ‘st
Part 2 Charge to corporation tax: basic provisions Chapter 1 The charge to corporation tax General scheme of corporation tax Territorial scope of charge 5 1 A UK resident company is chargeable to corporation tax on income on all its profits wherever arising (but see Chapter 3A for an exemption from charge in respect of profits of foreign permanent establishments) . 2 A non-UK resident company is within the charge to corporation tax on income only if— a it carries on a trade of dealing in or deve
Part 2 Charge to corporation tax: basic provisions Chapter 1 The charge to corporation tax Charge to tax on profits Charge to corporation tax 2 1 Corporation tax is charged on profits of companies for any financial year for which an Act so provides. 2 In this Part “ profits ” means income and chargeable gains, except in so far as the context otherwise requires. 2A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 In this Act “ the charge to corporation tax on income ” means the c