Corporation Tax Glossary

Key facts

Corporation Tax has its own vocabulary — from AIA to WDA.
Most terms are defined in UK legislation or HMRC guidance; this glossary links to official sources.
Use Ctrl + F (or Cmd + F on Mac) to search for a specific term.

A – C

Term	Definition
Accounting period	The period (up to 12 months) over which a company calculates its Corporation Tax liability. Not always the same as the financial year shown in its accounts.^[1]
AIA (Annual Investment Allowance)	A 100% first-year capital allowance on most plant and machinery, permanently set at £1 million since April 2023.^[4]
Arm’s length	The price or terms that unrelated parties would agree in an open market. Used in transfer pricing rules for transactions between connected parties.^[3]
Associated company	A company controlled by the same person(s). The number of associated companies divides the £50,000 small profits threshold and £250,000 upper limit.^[1]
ATED (Annual Tax on Enveloped Dwellings)	An annual charge on companies that own UK residential property valued over £500,000.^[1]
Balancing charge	A tax charge that arises when you sell a capital asset for more than its tax written-down value, clawing back excess allowances previously claimed.^[4]
BIK (Benefit in Kind)	A non-cash benefit provided to employees or directors (e.g. company car, private medical insurance). Reported on form P11D.^[2]
Capital allowances	Tax relief that lets companies deduct the cost of qualifying capital assets (plant, machinery, buildings) from taxable profits, replacing depreciation in the tax computation.^[4]
Chargeable gain	The taxable profit arising when a company disposes of a capital asset (e.g. property, shares) for more than its allowable cost. Added to taxable profits for CT purposes.^[3]
Close company	A UK company controlled by 5 or fewer participators, or by any number of directors. Most owner-managed companies are close companies, subject to extra rules (e.g. Section 455).^[3]
CT (Corporation Tax)	The tax UK limited companies pay on their taxable profits. The main rate is 25% from April 2023.^[1]
CT600	The Company Tax Return form submitted to HMRC. It includes the tax computation, capital allowances, and any relief claims.^[1]
CT41G	The form HMRC uses to gather information about a newly-incorporated company. Usually sent automatically after Companies House registration.^[2]

D – G

Term	Definition
DLA (Director’s Loan Account)	A record of money borrowed from or owed to the company by a director. An overdrawn DLA (director owes the company) can trigger Section 455 tax.^[3]
Disallowable expense	A cost shown in the accounts that cannot be deducted for tax purposes — e.g. entertaining, depreciation, or fines. Added back in the tax computation.^[3]
Distributions	Payments a company makes to shareholders, primarily dividends. Dividends received by a UK company from another UK company are normally exempt from CT.^[1]
Dormant company	A company with no significant accounting transactions during the period. It may still need to file at Companies House but can claim exemption from filing a CT600.^[2]
DS01	The Companies House form used to apply to strike off and dissolve a company voluntarily.^[2]
FRS 102	The main UK financial reporting standard for small and medium-sized companies. Section 1A of FRS 102 covers small companies.^[2]
FRS 105	The micro-entity financial reporting standard, allowing the simplest set of accounts with limited disclosures.^[2]
Full expensing	A permanent 100% first-year allowance for qualifying new plant and machinery (main-rate assets). Available from April 2023.^[4]
Group relief	The ability to surrender trading losses between companies in the same 75% group, reducing the group’s overall CT bill.^[3]

H – M

Term	Definition
HMRC	His Majesty’s Revenue & Customs — the UK tax authority that administers Corporation Tax, Income Tax, VAT, and other taxes.^[1]
iXBRL (Inline XBRL)	The digital tagging format required for Corporation Tax returns. Company accounts filed with the CT600 must be in iXBRL.^[2]
Loan relationship	Any arrangement where a company borrows or lends money, or issues/holds a debt security. Interest and related costs are taxed under the loan relationship rules rather than as trading expenses.^[3]
Main pool	The capital allowances pool for most plant and machinery, receiving writing-down allowances at 18% per year (reducing-balance).^[4]
Marginal relief	A tapering relief that reduces the effective CT rate for companies with profits between £50,000 and £250,000, from 25% down towards 19%.^[1]
MVL (Members’ Voluntary Liquidation)	A formal process to wind up a solvent company, distributing assets to shareholders as capital (potentially qualifying for Business Asset Disposal Relief).^[2]

N – R

Term	Definition
Non-trading income	Income from activities that are not the company’s trade — e.g. investment property rent, bank interest, or dividends received.^[3]
P11D	The HMRC form reporting benefits in kind and expenses provided to employees and directors during the tax year.^[2]
Participator	A person who has a share or interest in a company — primarily shareholders and loan creditors. Relevant for close company rules.^[3]
Patent Box	An elective regime allowing companies to apply a 10% effective CT rate to profits earned from qualifying patents.^[1]
Period of account	The period covered by a company’s statutory accounts. Can differ from the CT accounting period (e.g. an 18-month first period is split into two 12-month and 6-month CT periods).^[1]
QIP (Quarterly Instalment Payment)	The payment regime for “large” companies (profits over £1.5m). Tax is paid in four instalments during and after the accounting period.^[1]
R&D tax relief	Corporation Tax relief for companies carrying out qualifying research and development. Since April 2024, the merged R&D scheme provides a 20% above-the-line credit (ERIS).^[1]
RDEC (R&D Expenditure Credit)	An “above the line” credit for R&D spending, now part of the merged scheme from April 2024.^[1]

S – Z

Term	Definition
SBA (Structures & Buildings Allowance)	A 3% straight-line annual allowance for the cost of constructing or renovating non-residential structures and buildings.^[4]
Section 455 tax	A temporary tax charge (at 35.75% for loans made on or after 6 April 2026; 33.75% for earlier loans) on loans made by a close company to its participators that remain outstanding 9 months after the accounting period end. Repaid when the loan is repaid.^[3]
Small profits rate	The 19% Corporation Tax rate that applies to companies with taxable profits of £50,000 or less (divided by associated companies).^[1]
Special-rate pool	A capital allowances pool for long-life assets, thermal insulation, integral features, and cars with CO₂ over 50g/km. WDA at 6% per year.^[4]
SSE (Substantial Shareholding Exemption)	An exemption from Corporation Tax on gains when a trading company disposes of a substantial shareholding (10%+) in another trading company.^[3]
Transfer pricing	Rules requiring transactions between connected parties to be priced at arm’s length, preventing profits from being shifted to lower-tax jurisdictions.^[3]
UTR (Unique Taxpayer Reference)	The 10-digit reference number HMRC assigns to each company for Corporation Tax purposes.^[1]
WDA (Writing Down Allowance)	The annual percentage deduction applied to the reducing balance of a capital allowances pool — 18% for the main pool, 6% for the special-rate pool.^[4]
Wholly and exclusively	The test for whether an expense is allowable for Corporation Tax — it must be incurred wholly and exclusively for the purposes of the trade.^[3]

Tip: This glossary covers the most commonly encountered terms. For the full legal definitions, refer to the HMRC Company Taxation Manual.

Frequently Asked Questions

What does CT600 stand for?

CT600 is the Company Tax Return form submitted to HMRC. It includes the tax computation, capital allowances claims, and any relief claims for the accounting period.

What is the wholly and exclusively rule?

It is the fundamental test for whether an expense is allowable for Corporation Tax. An expense must be incurred wholly and exclusively for the purposes of the company’s trade to be deductible.

What does iXBRL mean?

iXBRL stands for Inline eXtensible Business Reporting Language. It is the digital tagging format required for company accounts filed with the CT600 to HMRC.

What is a UTR number for Corporation Tax?

A UTR (Unique Taxpayer Reference) is the 10-digit reference number HMRC assigns to each company for Corporation Tax purposes. It is used to identify the company in all dealings with HMRC.

Sources

Corporation Tax — GOV.UK
Corporation Tax: detailed information — GOV.UK
HMRC internal manual: Company Taxation Manual — GOV.UK
Capital allowances: detailed information — GOV.UK