Do I have to pay UK corporation tax?
All limited companies are required to submit a corporation tax return and pay tax on their profits. This tax is also commonly referred to as company tax, ltd company tax and business tax.
How do I register for corporate tax?
When you set up a limited company, HMRC are automatically notified and register a limited company for corporate tax. You will be sent a 10 digit unique tax reference.
What is the corporate tax rate?
For a single small businesses, it is currently 19%.
Can I pay corporate tax in installments?
Not if you are a small company. You must normally pay corporation tax 9 months and 1 day after your accounting year end. So for example, if your accounting period ends 31-March, you must pay the tax by 1 January the following year. (The regime for larger companies is different). The rules can become complex very quickly if you have more then 1 company.
Why don't I file the corporate tax return myself using my software?
The starting point for a UK business tax return is the accounting profits (so long as they are prepared under locally recognised accounting standards). However, there are stark differences between the tax rules and the accounting rules that mean the tax treatment doesn't automtically match the accounting treatment. For example an accounting loss on the revaluation on an investment property doesn't give rise to a taxable loss that can be used to offset against profits.
What if I have missed the filing deadline for a UK corporate tax?
The penalty regime is harsh (unless you have a reasonable excuse)
1 day late - £100
3 months - another £100
6 months late - HMRC will estimate your tax bill and add a penalty of 10% on the unpaid tax
12 months late - another 10% on any unpaid tax
If your tax return is late 3 times in a row, the £100 penalties are increased to £500 each.
What tax reliefs can a small limited company claim
- Up to 100% tax relief on capital expenditure
- Group relief
- Upto 230% tax relief of qualifying research and development expenditure
- Dispose shares in a trading subsidiary free of capital gains tax
- Relief on interest payments
- Double tax relief
What is group relief?
If you own a group of companies, for example under a holdco, you are entitled to set off losses against the profit making companies. This is perfectly legal but there is of course some admin work to making the claim. Failure to comply will result in the claim being rejected and penalites arising.
How can we help?
- Prepare the tax calculation and ensure you make use of all available tax reliefs
- Complete the UK tax return and ensure all the boxes are completed correctly
- File the tax return in the prescribed format with HMRC (with iXBRL tagged accounts)
- Advise on tax payment dates so you are not charged penalties and/or interest.