Pearl Lemon accountants provide Corporate Tax Services, below you can read how you can pay for it.
The UK government collects corporation tax from limited companies and other organizations. A company’s profits determine how much corporation tax it has to pay. There are several ways to reduce the amount of taxes you have to pay. There are certain expenses you can deduct, as well as allowances that you can use.
Specifically, a limited company must pay corporation tax on the following:
- Earnings derived from trading are called trading profits
- Investing
- The process of selling land, properties, shares, and machinery for a gain that must be charged
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Who pays corporation tax?
All UK limited companies are required to pay corporation tax. Corporation tax is not paid by sole traders and partnerships; they must file a tax return and pay income tax.
Corporation tax is payable by other organizations even if they do not belong to a limited company. Examples include:
- Associations for housing
- Organizations that have membership
- Organizations and clubs
- A co-operative
What is the UK corporation tax rate?
In the UK, corporation tax is charged on all business profits at a rate of 19%. A previous government pledge had been to lower the rate to 17% by April 2020, but it will remain at this level for the next 2 years.
Corporate tax registration and responsibilities
You will have to register for corporation tax when starting up a limited company. HMRC has a website that you can use to register. You will need to provide the following information:
- Name of the company
- Number of registration
- Your company’s accounting period begins on the date of your business start date.
- Address of the main office
- Description of the business
- Directors’ names and addresses
This must be done within three months of starting your business. Company directors are responsible for completing, filing, and paying the company’s tax return. A director is still legally responsible for doing this, but you can hire an accountant to do it for you.
How to file a company tax return
Whenever your company is taxed, you need to fill out a CT600 form. Companies House and HMRC both require your company’s accounts to be filed. On the CT600, you should detail your turnover and profit during the reporting period, as well as what allowances and reliefs you have claimed.
Your corporation tax will then be calculated from this. Your company needs to file its tax return 12 months after the period covered by it. You must still file a CT600, even if your business is losing money.
The bill will need to be paid in installments if your profits exceed £1.5 million. Your company’s size and the length of the accounting period determine the due dates for these payments. For a year’s worth of payments, there are two payments due before the end of the accounting period.
As an estimate of the corporation tax obligation, the installments will be due once the final liability is calculated after the end of the period.
What is the due date for corporation tax?
Other taxes have different filing deadlines than corporation taxes. You must pay them prior to filing for corporation taxes. Therefore, a corporation tax accounting period determines when it needs to be paid.
After the end of your accounting period from the previous financial year, you must settle your corporation tax bill nine months and one day later. The bill is due on 1 October if your accounting period ends on 31 December.
