Corporation Tax - An In Depth Guide

Corporation Tax

Get help with Corporation tax calculations and enquiries from our expert accountants.
  • Corporation Tax Registration
  • Tax Return Filing
  • HMRC Correspondence
  • Tax Enquiries

How Can Accountly Help with Corporation Tax?

Corporation Tax can be a difficult and time-consuming payment to work out. HMRC are also rather inflexible with deadlines and inaccuracies, so if anything is wrong, you could risk a heavy fine or penalty. As your online accountant, we don’t just help with timekeeping, but also:

  • Check Eligibility: They will be able to tell if you need to pay, and then inform HMRC that your company or organisation is liable for Corporation Tax payments
  • File Corporation Tax Returns: The forms will be correct and filed along with any supporting documents, such as accounts and tax documentation. If you must pay in instalments, they can make this all clear
  • Deal With Correspondence: Should HMRC need to investigate your Corporation Tax return, the accountant can deal with the information they need and talk to them on your behalf, acting as a middleman
  • Prepare Company Accounts: If you need help from the very core of your business’ finances, so there is no risk of your tax returns being wrong, an accountant can help get everything in order in time for the filing, and even keep on top of things as and when needed. They will use online software to make everything quick, concise and accessible
  • Check Exclusions: You don’t want to pay for something you don’t have to pay for, and likewise if you can claim for something you want to make sure you know about it. This is where an accountant can come in handy, as they will know everything about both the tax and your accounts.

Do I have to pay Corporation Tax?

Corporation Tax is a tax charged against any profits you make if you are a limited company, a foreign company with a UK branch or office, or a club/co-operative/other unincorporated association.

There are certain steps you must take for you to work out, pay and report your tax, as you won’t receive a bill from HM Revenue and Customs based on your accounts. It is all self-assessed.

When you start up a business or restart a dormant one, you must register for Corporation Tax, so HMRC know you are liable to pay. A record of all accounts, transactions and assets must be kept so you can file company tax returns when needed, and work out how much Corporation Tax is due. It will also allow you to work out whether you do actually need to pay anything.

Profits you will have to pay Corporation Tax on include:

  • Doing business (‘trading profits’)
  • Investments (stock, bonds and property)
  • Selling assets for more than they cost (‘chargeable gains’)

If your company is UK-based, it pays Corporation Tax on all profits from the UK and abroad. If your company is based overseas but has an office/branch in the UK, it pays Corporation Tax on profits from any UK activities.

Rates And Exclusions

Corporation Tax rates currently stand at 19% for 2018/19, although there are some instances where you could pay less.

You may be able to deduct the costs of running your business from the tax payment, or claim allowances on things such as equipment, machinery and business vehicles.

There are other reliefs too, such as Research and Development Relief (if your business makes a profit from patented inventions), benefits for creative industries who profit from theatre, film, television, animation or video games, Disincorporation Relief if you’re closing your company and becoming a sole trader, ordinary business partnership or limited partnership, as well as a trading losses relief.

Want To See How Much You Could Save?

Get a Personalised Accountancy Quote in less than a Minute

Will I Be Penalised If I Don’t Pay On Time?

You usually have to send your general Tax Return to Company House 12 months after the end of your accounting period, which is often your financial year.

However, there is a different date for Corporation Tax, which is nine months and one day after the end of the accounting period.

Penalties for late filing start at £100 if you’re a day late, and this can increase based on your bill estimation after six months. If you are late three times in a row, the penalties will rise to £500.

You are able to make appeals if appropriate.

Can I Pay In Instalments?

If your profits are over £1.5 million, you must normally pay your Corporation Tax for that period electronically and in instalments. There are a few exceptions, and the installment due dates will also depend on your company’s individual accounting year.

Scroll to Top