limited company tax calculator

If you run a UK limited company, estimating tax before year-end can save you from nasty surprises and help you plan cash flow, dividends, and reinvestment. Use the calculator below for a quick estimate of corporation tax and dividend tax based on your inputs.

How this limited company tax calculator works

This calculator estimates two major taxes that owner-directors typically care about:

• Corporation tax paid by the company on taxable profits.
• Dividend tax paid personally when profits are extracted as dividends.

It starts with turnover, deducts allowable expenses, salary, and employer pension contributions to estimate accounting profit. Then it applies losses brought forward (if used) to estimate taxable profit, calculates corporation tax, and finally estimates dividend tax based on your personal income picture.

Key inputs you should understand

1) Turnover

Your gross income from trading before expenses.

2) Allowable expenses

Costs incurred wholly and exclusively for business purposes. Typical examples include software, insurance, subscriptions, rent, accountancy fees, and marketing spend.

3) Director salary and employer pension

Both usually reduce company profits for corporation tax. Salary has PAYE/NIC implications and pension contributions must be justifiable as wholly and exclusively for business.

4) Losses brought forward

Relievable losses from earlier periods can reduce taxable profits and therefore current corporation tax. In practice, usage rules can vary depending on your company history and group structure.

5) Associated companies

The lower and upper corporation tax limits are split across associated companies. If you have associated companies, the small profits threshold and upper threshold are reduced, potentially increasing the effective tax rate sooner.

Corporation tax bands in plain English

The UK system uses a lower rate for smaller profits and a main rate for larger profits, with a marginal band in between. In that middle zone, each extra £1 can be taxed at a higher effective marginal rate than either headline figure.

That means planning timing and expense recognition can matter. A modest shift in taxable profit near thresholds may change your tax bill more than expected.

Salary vs dividends: planning basics

Many directors combine salary and dividends to balance corporation tax efficiency, personal tax bands, and state benefit considerations. While a low salary plus dividends can be efficient in some cases, the “best” split depends on:

• Other personal income (property, employment, investments)
• Partner/spouse income and allowances
• Pension strategy and mortgage plans
• Need for stable monthly cash flow

This calculator shows the impact of changing your dividend amount quickly, so you can compare scenarios before making withdrawals.

Practical example

Suppose your company has £150,000 turnover, £30,000 expenses, and pays a £12,570 salary. With no brought-forward losses, your taxable profit is likely in the marginal range for corporation tax. If you then withdraw £30,000 in dividends, your personal dividend tax depends on how much of your basic and higher rate bands are already used.

Try changing just one variable at a time—like pension contributions or dividend amount—to see where tax increases sharply. That is usually where planning opportunities exist.

Common mistakes this tool helps you avoid

• Ignoring cash set-aside for tax: Profit on paper is not free cash.
• Over-distributing dividends: Dividends should usually come from distributable post-tax profits.
• Forgetting associated company impact: Thresholds can shrink significantly.
• Only looking at corporation tax: Personal tax can change the true extraction cost.

Important limitations and next steps

This is a planning estimator, not a statutory tax computation. It does not include every relief, surcharge, NIC detail, benefit-in-kind treatment, R&D treatment, capital allowances mechanics, or group complexities.

Use it to prepare better questions for your accountant. A short year-end planning meeting can often save more than it costs—especially if your profits are near tax thresholds.