What is Corporation Tax?
Corporation tax is a tax levied on the profits made by companies operating in the UK. It is a self-assessment system, meaning companies must calculate and report the amount they owe without receiving a tax return from HMRC. The tax applies to profits from trading, investments, and selling assets such as land or property.
Who Needs to Pay Corporation Tax?
- Limited companies registered in the UK.
- Foreign companies with a permanent establishment in the UK.
- Clubs, associations, and other organizations operating as corporate entities.
Corporation Tax Rate The current standard corporation tax rate in the UK is 25%, effective from April 2023. However, companies with profits of £50,000 or less qualify for the small profits rate of 19%. For profits between £50,001 and £250,000, marginal relief applies, gradually increasing the effective tax rate.
Key Deadlines
- Filing the Company Tax Return (CT600): Must be submitted within 12 months after the end of the company’s accounting period.
- Paying Corporation Tax: Payment is due within 9 months and 1 day after the end of the accounting period.
Late submissions or payments may incur penalties and interest charges.
Steps to Comply with Corporation Tax Requirements
- Prepare Financial Records: Maintain accurate bookkeeping records, including income, expenses, and allowable deductions.
- Calculate Taxable Profits: Include trading profits, investment income, and gains from asset sales.
- Complete and File CT600: Submit the Company Tax Return along with supplementary computations to HMRC.
- Pay Tax Owed: Ensure payment is made on time to avoid penalties.
Why Is Corporation Tax Compliance Important?
- Avoids legal and financial penalties.
- Ensures smooth business operations and financial planning.
- Builds credibility with stakeholders and potential investors.
How We Can Help Our corporation tax services include:
- Accurate computation of taxable profits.
- Preparation and filing of the CT600 and related documentation.
- Strategic advice to minimize tax liabilities within legal boundaries.
Let us handle your corporation tax obligations, so you can focus on growing your business.