First Year Corporation Tax: A Complete Guide for New Companies
Starting a new limited company is exciting — but corporation tax obligations begin from day one. Many new company directors are caught out by registration deadlines, shortened first accounting periods, and unfamiliar filing requirements.
This guide walks you through everything you need to know about corporation tax in your company's first year.
When Does Corporation Tax Start?
Your company becomes liable for corporation tax from the date it starts any activity. This includes:
- Trading (selling goods or services)
- Receiving income (interest, rental income)
- Buying and selling assets
Important: Even if your company hasn't started trading yet, if it earns bank interest or holds investments, it may still have a corporation tax liability.
Registering for Corporation Tax
You must register your new company for corporation tax with HMRC within 3 months of starting business activity. You can register:
- Online via the HMRC registration service
- Automatically as part of the Companies House incorporation process (if you opted in)
When you register, HMRC will send you:
- Your Unique Taxpayer Reference (UTR) — a 10-digit number you'll need for all future filings
- Confirmation of your accounting period dates
- A notice telling you when your first CT600 is due
If you don't register within 3 months, HMRC can charge a penalty — though in practice, they're more focused on you filing and paying on time.
Your First Accounting Period
Your company's first accounting period is special because it doesn't have to be 12 months. It runs from the date of incorporation (or the date you start trading) to your chosen accounting reference date (ARD).
Examples
Scenario 1: Short first year
- Company incorporated: 15 July 2024
- ARD set to: 31 March
- First accounting period: 15 July 2024 to 31 March 2025 (8.5 months)
Scenario 2: Long first year
- Company incorporated: 1 February 2024
- ARD set to: 31 January
- First accounting period: 1 February 2024 to 31 January 2025 (12 months)
Key rule: A company's first accounting period can never exceed 12 months for corporation tax purposes. If your first period at Companies House is longer (up to 18 months is allowed there), HMRC splits it into two separate accounting periods — each requiring its own CT600.
Choosing Your Accounting Reference Date
Common choices for the ARD include:
- 31 March — aligns with the UK tax year for corporation tax purposes
- 5 April — aligns with the personal tax year (convenient for director-shareholders)
- 31 December — calendar year end
- The month of incorporation — gives you a full 12-month first year
There's no single "best" date, but 31 March is popular because the corporation tax financial year runs from 1 April to 31 March. This simplifies calculations if tax rates change between financial years.
Filing Deadlines for Your First CT600
The deadlines for your first year follow the same rules as every other year:
| Obligation | Deadline |
|---|---|
| Pay corporation tax | 9 months and 1 day after accounting period end |
| File CT600 | 12 months after accounting period end |
For a full breakdown of every deadline (including Companies House), see our CT600 deadline guide.
Example
If your first accounting period ends 31 March 2025:
- Pay tax by: 1 January 2026
- File CT600 by: 31 March 2026
Critical warning: Even if your company made no profit (or didn't trade), you usually still need to file a CT600. Filing a nil return is straightforward and avoids penalties of up to £1,600+ for late filing.
What Records Do You Need to Keep?
From day one, you should be recording:
- All income and expenses — bank statements, invoices, receipts
- Director's loan account transactions — any money moving between you and the company
- Asset purchases — equipment, vehicles, tools (for capital allowances)
- Bank interest received — even small amounts
- Payroll records — if you're paying yourself a salary
- Dividend records — board minutes and dividend vouchers
HMRC requires you to keep records for at least 6 years from the end of the accounting period they relate to.
What You'll Need to File Your First CT600
To complete your first CT600, you'll need:
- Company accounts — a profit and loss statement and balance sheet for the period
- Tax computation — calculating taxable profits by adjusting accounting profits for disallowable expenses, capital allowances, etc.
- iXBRL-tagged accounts — your accounts must be in iXBRL format for electronic filing
- CT600 form — the actual tax return, with all relevant boxes completed (our CT600 box-by-box guide explains every box)
For simple companies (one director, straightforward trading), this is manageable without an accountant — especially with the right software.
Common First-Year Mistakes
1. Missing the Registration Deadline
Register within 3 months of starting activity. Don't wait for your UTR to arrive before keeping records.
2. Confusing Companies House and HMRC Deadlines
Companies House annual accounts deadline (9 months) is different from the CT600 deadline (12 months). They're separate filings to separate bodies.
3. Not Filing Because "We Didn't Trade"
Even dormant or non-trading companies usually need to file a CT600 (a nil return). Not filing leads to automatic penalties.
4. Forgetting Capital Allowances
New companies often buy equipment, laptops, furniture etc. These qualify for capital allowances (including the Annual Investment Allowance of up to £1 million). Claiming them reduces your tax bill — but only if you include them in your CT600.
5. Not Separating Personal and Business Expenses
Keep personal and business finances separate. Mixed expenses lead to disallowed deductions and potential HMRC enquiries.
6. Overlooking the Short First Year
If your first accounting period is shorter than 12 months, your capital allowances and loss relief may be proportionally reduced. The Annual Investment Allowance, for example, is scaled down for short periods.
Corporation Tax Rate for New Companies
New companies pay the same rates as everyone else. For FY2024 (1 April 2024 – 31 March 2025):
- 19% on profits up to £50,000 (small profits rate)
- 25% on profits over £250,000 (main rate)
- Marginal relief applies between £50,000 and £250,000
These thresholds are divided by the number of associated companies — so if you (or your associates) control other companies, the thresholds shrink.
File Your First CT600 Easily with Taxpipe
Filing your first corporation tax return doesn't have to be daunting. Taxpipe guides you through the entire CT600 process step by step — from uploading your accounts to submitting directly to HMRC. All for just £59, with no accountant required.