Everything You Need to Know
Running a business comes with all kinds of obligations to the taxman. One of the most important is corporation tax. Lots of businesses find the rules around it confusing or are overwhelmed just trying to get started. That’s where we come in. As an experienced local accountant working with a wide range of businesses, we know our stuff when it comes to all things corporation tax.
So, to find out what it is, along with when and how you should pay it, read on!
What is corporation tax?
First things first: what exactly is corporation tax? It is a tax paid on a limited company’s profits. This will be done after you have deducted expenses like wages and raw material costs. It’s important to note that the tax doesn’t just apply to the profits you make from your core business activities, e.g. appointments if you run a hairdresser’s. It also takes into account other financial gains, such as the sale of property or shares.
A note for sole traders or partnerships: you don’t have to pay corporation tax. We’ll guide you through your own specific obligations, so there’s no need to be concerned with this guide.
How is corporation tax calculated?
Corporation tax is calculated by how much profit your company has made during its accounting period. If your company made more than £250,000 profit, you will pay the main rate of 25%.
If your business made a profit of £50,000 or less, things are slightly different, with you playing the ‘small profits rate’. This is 19%.
When is the corporate tax filing deadline?
You have to submit your corporation tax return between the date of your company’s year-end and your statutory filing date. Your statutory filing date is 12 months after your company’s year ends. Your accounting period is unique to your business, but most companies’ are aligned with the financial year, which runs from 1st April to 31st March the following year. If your accounting period changes, you need to let HMRC know, as you may need to file two returns.
How to pay corporation tax
So, when do you pay corporation tax? While you must submit your corporation tax within 12 months after the end of your accounting period, your payment is usually due earlier: 9 months and 1 day after the period ends. This is where people can start to get a little confused. Luckily for you, we are here to help. Our accountants for corporation tax will prepare and file your return and minimise your liabilities using any reliefs available to your business. Then we’ll let you know exactly how much you have to pay!
Talk to us
We are the experts in corporation tax that Peterborough businesses recommend. From figuring out ways to reduce your tax burden in line with all current rules and regulations to keeping HMRC informed of any changes that may affect your return, we can handle it all.
To find out more, just get in touch with the team today!