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In the UK, corporation tax is the tax that limited companies have to pay on their profits. The payment deadlines tend to differ from other taxes as it depends on your company’s accounting period. The corporation tax usually covers a 12-month corporation tax accounting period that matches your company’s 12-month financial year. However, if your company accounts extend longer than 12 months, this must be split into two tax accounting periods.
If you are starting a new company, you must inform HM Revenue & Customs (HMRC) within three months of initiating trading (alternatively if you decide to close down your business you also need to inform HM Revenue & Customs (HMRC), which helps the HMRC determine when you need to complete your company tax returns. It is important to remember that you will need to pay corporation tax before you file your company tax return.
The deadline to pay your corporation tax is normally nine months after the end of your accounting period for your previous financial year – before your corporation tax is due. For larger businesses with more than £1.5 million in profits, the process is different; they are required to pay their corporation tax in instalments.
As soon as a business starts to generate a profit, the standardised rate of corporation tax of 19% applies. As of April 1st, 2023, a new rate of 25% will be introduced and be made applicable to all profits exceeding £250,000. If the company’s profits are £50,000 or below, the lower limit rate of 19% will apply.
The company tax returns take into account the profit and loss shown on your company’s financial accounts. A tax calculation to show how your company’s profits have been adjusted to work out the taxable profits must be included in the company tax return.
It is mandatory for all limited companies to complete a company tax return online. This is then sent to HMRC within the appropriate time period. When submitting your tax return, it must be filed along with your tax calculation and financial accounts. Any necessary changes can be made up to 12 months after the deadline date.
As for all small businesses in the UK
A Company Tax Return reports your spending, profits and corporation tax that is due to the HMRC. A Company Tax Return is known as a form CT600. This is submitted alongside a financial report to show how much you owe in tax clearly.
All companies must file their Corporation Tax Return with HMRC online. You or your accountant will need to set up an online account with HMRC for this. As well as submitting the CT600, you must also send the financial accounts and Corporation Tax Calculations.
All companies must also file their accounts with Companies House via post or online.
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The following information must be provided when submitting your Company Tax Return:
This is your company’s taxable profits or loss for corporation tax (this is not the same as the profits or loss shown in your annual accounts).
This includes information such as details about your company, the corporation tax due and details of any capital allowances claimed.
This usually includes an account of profits and loss, a statement of financial position and a director’s report.
The deadline for filing your company tax return is 12 months after the end of the accounting period to which it relates.
The deadline to pay your company tax return is nine months and one day after the accounting period end.
If you start your business on 15 January 2020, Companies House will set your financial year to end on 31 January 2021.
Therefore, you will need to file two company tax returns in your first year. One to cover the first 17 days and one to cover the following 12 months.
After your first year of trading, your accounting period will run from 1 February to 31 January.
A CT600, also known as a Company Tax Return, is the filing needed to pay tax on your company’s earnings. As well as including standard information about your company it also includes some complex calculations. This includes calculations such as:
Inevitably, penalties and fines will be applied for late filing.
|How late is your return?||Penalty|
|One day late||£100|
|Three months late||An additional £100|
|Six months||HMRC will estimate your corporation tax bill and add 10 per cent of the bill as a penalty|
|Twelve months late||Another 10 per cent of the tax liability|
The deadline to pay your company tax return is nine months and one day after the accounting period end. This is applicable to companies with taxable profits of up to £1.5 million.
If you are late for your corporation tax payment deadline, HMRC state that they will charge you daily interest. This starts from the date after you should have paid your corporation tax to the date you do eventually pay it. However, you may be pleased to know that according to HMRC, late payment interests are tax deductible for corporation tax purposes.