Corporation Tax

This records Corporation Tax owed to HMRC on the company's taxable profits. As a liability, it normally carries a credit balance: the annual tax charge increases it (credit), and payment to HMRC decreases it (debit).

Real-world examples

Small company

A small trading company with taxable profits of £40,000 — below the small profits threshold — pays Corporation Tax at the 19% small profits rate: £7,600. The entry is a debit of £7,600 to 9001 (Taxation), the P&L tax charge, and a credit of £7,600 to 2110 (Corporation Tax), the amount still owed to HMRC.

Larger company

A larger company with profits of £300,000 — above the upper threshold — pays the main 25% rate in full: £75,000. The entry is the same shape at a bigger scale: a debit of £75,000 to 9001 and a credit of £75,000 to 2110. Profits falling between the two thresholds are taxed at an effective rate somewhere between 19% and 25%, using marginal relief, so it's worth checking which band a company actually falls into rather than assuming either rate applies outright.

Commonly confused with

Because code 2109 (Accruals) sits right next to this one in Current Liabilities, it's a common mis-posting target. Code 2110 is specifically for corporation tax, while 2109 covers accruals — similar in nature, but keeping them separate is what makes the current liabilities section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

An error posting to Corporation Tax misstates what the business owes, and for a Current Liabilities code specifically it can distort the working capital and current ratio that lenders and suppliers look at when assessing short-term financial health.

Other codes in Current Liabilities