A Quick Guide to UK Corporation Tax

Jan 15, 2021 | FAQ, Guide, Tax

There is a specific procedure you should follow to work out, pay and report your tax. You will not be receiving a bill for Corporation Tax. WIREACCOUNTANTS can help you with all aspects of Corporation tax. But first, let us give you a brief introduction through our FAQ segment.

Where is Corporation Tax applicable?
  • Any profits a business makes in its financial year.
  • Any money the business makes from investments,
  • Any money gained from selling capital assets for more than they cost – “Chargeable gains”.
Who pays Corporation Tax?
  • Limited companies
  • Foreign companies with a UK branch or office
  • Clubs, co-operatives or other unincorporated associations

It is important to note that if your company;

  • Isn’t based in the UK but has an office or branch here, you only have to pay Corporation Tax on profits from your company’s UK activities.
  • Is based in the UK, you have to pay Corporation Tax on all its profits from the UK and abroad.
What is the current Corporation Tax rate?

The corporation tax rate for company profit is currently 19%.

What is the accounting period?

Your accounting period is usually the same 12-month period as the financial year covered by your annual accounts.

What is Self-Assessment?
  • Self-Assessment is a company’s estimation of its own Corporation tax liability.
What are the deadlines?
  • Taxes due need to be paid by the deadline, which is usually nine months and one day after the end of its accounting period.
  • A company tax return has to be filed with HMRC within twelve months of the company’s yearend.
What if my company has no Corporation Tax due?

Even if you have no corporation tax to pay, you’ll still need to submit a company tax return.

What happens if I don’t file/pay Corporation Tax in time?

Interest is charged on late payment of corporation tax, and there are also penalties for late filing of a company tax return.

What are the allowable expenses I can claim?

You simply need to make sure the item or service was used exclusively for business purposes. By deducting the costs of these expenses from your business profit, you reduce the amount you’ll have to pay tax on and ultimately lower your tax bill.

  • Companies can deduct costs for expenses that have purely been used by the business. This can include things like transportation costs, office equipment, petty cash and other things specific to your industry.
  • If you have employees, salaries and employer National Insurance contributions also count as a business expense, and can be deducted from the company’s taxable profits.
  • You can claim relief on assets that have become worthless. A loss can be claimed even though the asset has not been sold, and this can then be offset against chargeable gains.
  • Contributions to registered pension schemes are normally allowable for tax in the year of payment.
  • You can make a proper provision in the annual accounts for specific bonuses paid up to nine months after the yearend. Make sure that these are charged to PAYE and NI as appropriate.
  • You can claim rollover relief if your company buys certain new chargeable business assets within one year before or three years after selling a business asset. This effectively postpones any tax liability until the new asset is sold.

We hope this FAQ provided answers to some of the questions you had with regards to Corporation Tax. We kept the answers as short and straightforward as possible. Of course, there is a lot more to Corporation Tax than we have detailed above – especially the tax liability and tax relief and can be discussed in more intricate detail.

Do not worry about Corporation Tax – We are here to make your life easy.

Get in touch with us

Let us take all your accounting worries away. Request a Free Quote Below