What Is Corporation Tax?

Corporation Tax is a tax levied on the profits of limited companies and other incorporated entities in the UK. If your business operates as a limited company, a foreign company with a UK branch, or a club or cooperative, you’re likely required to pay Corporation Tax.

It applies to profits earned from:

1. Trading Activities: Income from regular business operations.
2. Investments: Profits from investments such as shares.
3. Selling Assets: Also known as ‘chargeable gains,’ these are profits from selling properties, land, or equipment.

Corporation Tax Rates in the UK

The Corporation Tax rate in the UK has been subject to changes, with the government periodically adjusting rates to support economic goals. Currently, companies with profits exceeding £250,000 pay the main rate of 25%, while small businesses with profits up to £50,000 pay a lower rate of 19%. Companies with profits between these thresholds may pay a tapered rate.

Filing Corporation Tax: Key Steps

Understanding the process of filing Corporation Tax is vital for avoiding penalties and ensuring compliance.

1. Register with HMRC
   Newly established businesses must register with HMRC to let them know they’re liable for Corporation Tax.
2. Maintain Accurate Records
   Keep detailed records of income, expenses, and transactions to calculate taxable profits accurately.
3. Prepare and Submit Company Tax Returns
   File a CT600 form, which includes your accounts and computations, typically within 12 months of the end of your company’s accounting period.
4. Pay the Tax
   Payment is due 9 months and 1 day after the end of your company’s accounting period, even if you file your return later.

Common Challenges Businesses Face

Many businesses face difficulties with Corporation Tax due to its complexities. Some of the common issues include:

• Misunderstanding allowable expenses.
• Incorrectly calculating capital allowances.
• Filing returns late, leading to penalties.

Henleaze Tax Consultancy is here to help you avoid these pitfalls.

How Henleaze Tax Consultancy Can Help

At Henleaze Tax Consultancy, we specialize in simplifying Corporation Tax for businesses of all sizes. Here’s how we can assist:

• Expert Advice: We provide tailored advice on tax planning to help reduce your Corporation Tax liability.
• Accurate Filing: Our team ensures your returns are accurate and submitted on time.
• HMRC Liaison: We handle correspondence with HMRC on your behalf, so you can focus on growing your business.

Conclusion

Corporation Tax is an unavoidable part of running a business in the UK, but with the right guidance, it doesn’t have to be overwhelming. Henleaze Tax Consultancy offers comprehensive support to help you meet your obligations with confidence and ease.

Contact us today to ensure your business is on the right track with Corporation Tax!