Corporation Tax Return

Limited companies are required to pay Corporation Tax which is a percentage of taxable profits before dividends are paid. The Corporation Tax rate for all non-ring fence companies is 20%. For example, if the company’s net taxable profit for the year is £20,000 then the company must pay HMRC £4000. There is a different Corporation Tax rate for ring fence companies (companies that make profits from oil extraction or oil rights in the UK). Taxable Corporation Tax profits refers to money that your company or association makes from:

• Doing business (trading profits)

• Investments

• Selling assets that return a profit (chargeable gains)

If your company is based in the UK then it has to pay Corporation Tax on all its profits from the UK and abroad. However, if it is not based in the UK but has a branch or office in the UK, then it only pays Corporation Tax on profits from UK activities.

Companies are therefore required to complete a Corporation Tax return in order to determine the amount of tax they need to be paying. This requires that they:

a) Register for Corporation Tax services with HMRC. This needs to be done no more than 3 months from the date the company begins trading

b) Keep accounting records which involves bookkeeping. Filing company accounts is the term given to the process of processing records in preparation for filing the Corporation Tax return. Companies also need to file company accounts with Companies House.

c) The Corporation Tax return deadline including payment is usually 9 months and 1 day after the company’s accounting period. For example, if the company’s accounting period is 1st of May to end of April 2017 then the return and payment deadline will be the end of January 2018.

Corporation Tax returns are included in our Accountancy Packages which allow us to deliver a complete accountancy solution for all your accountancy requirements. If you want us to file your return as a standalone service then please contact us for a free consultation.