Limited companies have to pay corporation tax. Corporation tax includes profits of the company and any gains from assets sold (Land, property, or shares) that have appreciated in value.
Partnerships and sole traders don’t have to pay corporation tax. Instead, they pay income tax on business profits and capital gains tax on any gain from the disposal of assets. It is your responsibility to ensure that you pay the correct amount of taxes. To do this, you need to keep accurate company accounts. You must also file a tax return before the deadline.
Who Pays Corporation Taxes?
All UK limited companies must pay corporate tax. corporate tax is not payable by sole traders or partnerships. Instead, they must fill out tax returns and pay income tax on their earnings.
However, there are other organizations that might need to pay corporation taxes even though they are not limited companies. These are:
- Clubs and societies
- Housing associations
- Co-operatives
- Membership organizations
What is the Corporate Tax Rate?
This tax will be paid by your company at 19% on profits. This is the amount of money that your company makes during that accounting period, excluding any overheads or expenses. The rate of corporate tax may change from time to time. The current rate of corporate tax can be viewed on your financial statements or on the government website.
How to Register for Corporate Tax?
You should Register for this tax if you start a limited business. This can be done through Gov.uk website. You’ll need the following details to complete the registration form:
- Company name
- Register number
- Your business start date (the date that appears on the accounting period of your company)
- Unique taxpayer reference (UTR) number
- The main address
- Type of business
- Directors’ names and addresses
This must be done within three months of the trade being initiated. The company director is responsible for filling out the tax return of the company. You can hire an accountant To do this.
How to Pay Corporation Tax?
Your company will not receive any bill from Her Majesty’s Revenue and Customs for its corporate tax. It is up to the director of the company to submit the necessary documentation annually for corporate tax. For information on how to pay your corporate tax, see the steps below.
Step 1: Register with HMRC
Registering your company with HMRC is the first step to paying corporate taxes. The first step is to visit the HMRC’s website and provide information. This includes your Unique Taxpayer Reference, (UTR), and the date that you began doing business. It is important to know the date you began your business. This will set up your accounting period.
Step 2: Document and prepare
Accounting documents are essential for the success of your business. This is particularly important for corporation taxes. To prepare your corporate tax returns, you will need to use your accounting records. The corporation returns are annual return that is based on the accounting period. You can calculate the amount you must pay HMRC by filling in the corporate tax return.
Step 3: Report and Pay
Once you have completed your paperwork, you will know how much you owe. You may not be required to pay corporation taxes if you have suffered operating losses or an overall loss. You still need to report HMRC about your income for the accounting period. After your accounting period is over, you will have 9 months and one day to file and pay taxes.
Step 4: Filing Your Corporate Tax
At the end, you need to file your corporate tax to HMRC. After the end of your accounting period, you have one year to file it. Bit confusing? You can contact us, we can file your corporate tax on your behalf.
What is the Deadline for Corporate Tax?
Your corporate tax must be paid within nine months and one day of the end of your accounting period if your taxable profits are £1.5m or less. You will be charged in installments if your taxable profits exceed this amount. For more information, see the HMRC website.
Why Do You Need to Prepare Your Company Tax Return Early?
Important to remember that the deadline to pay corporate tax is before the deadline to file your company tax returns, which is 12 months after your accounting period ends. Therefore, you will need to prepare your corporate tax return well before the deadline to be able to calculate how much corporate tax you must pay.
What Happens If My Business is Inactive?
Your business is considered dormant if you cease conducting business. HMRC will need to be notified if your business is declared dormant. Businesses can only be considered dormant if they cease trading and have no income. To determine if your business has gone dormant or not, consult tax professionals.
The Key Takeaways
corporate tax is a simple tax to calculate. These taxes are flat rates for all companies, domestic and foreign. It is easy to do your corporate taxes annually. Our professional tax accountants will help you learn more about taxation. You can call us at 02085718826 for more details.