Corporation tax, also known as company tax, is a tax paid by businesses based on their yearly profits. If you run a limited company, the rate of tax that you pay is 25% if your business makes £50,000 or more. If you make less, the rate is 19%. Unlike for sole traders, you don’t get a tax-free Personal Allowance to reduce corporation tax.
It’s not only limited companies who pay this tax. Actually, you have to pay if you’re any of the following organisations and you make profit:
Before you pay company tax, you need to register your company via Companies House and register to pay with HMRC. This is a single process unless you registered your company by post, with third-party software or using an agent. If you did any of these three things, you should register to pay corporation tax separately from when you register with Companies House.
Make sure that you pay your bill nine months and one day after the end of your accounting period.
If you pay your company tax bill late, HMRC has various powers to claim any money owed in the following ways:
Essentially, if you don’t pay on time, HMRC’s powers are far-reaching. It’s best to get in contact with them as soon as you know you won’t be able to pay. They may let you set up a payment plan. Give them a call on 0300 200 3822.
To register to pay with HMRC, make sure you have these three things to hand:
Of course! We advise that you start a comprehensive spreadsheet to keep track of your taxable income and relevant expenses throughout the year in order to make your tax return more straightforward. This can be done on an Excel spreadsheet or Google sheet to keep things simple!
You can also get corporate accounting services from our dedicated experts – Contact our team for more advice today!
This all depends on your business and your own needs and preferences. We have experts in Sage, Xero, QuickBooks, Free Agent and more. Speak to our accountants today to discuss your options and we can find the best solutions for you!