Corporation tax

Will my company have to pay corporation tax?

Your company will be liable for corporation tax on any taxable profits it generates.

Do I need to register my company for tax?

When your new company is registered with Companies House, HMRC will be automatically informed of its existence, so there is no need to contact them yourself. HMRC will send your company’s Unique Taxpayer Reference (UTR) to your registered office address, along with information and guidance on setting up your company’s online account for tax returns and corporation tax.

What information is required by HMRC?

When you receive your company’s Unique Taxpayer Reference (UTR), you will be asked to provide the following information to HMRC:

  • When your company started trading
  • Company name and registered number
  • Primary business address where trading takes place
  • The nature of your business
  • The made-up-to date of your annual accounts

This information should be sent to HMRC within 3 months of any business activity and it will be used to determine when you should pay corporation tax.

How much corporation tax will I have to pay?

Limited companies are charged a flat rate of 20% corporation tax on all taxable income.

When do I have to pay corporation tax?

The deadline for paying corporation tax falls before the deadline for filing a Company Tax Return, so make sure you don’t confuse the two dates. HMRC will let you know when your tax is due and when you should file your tax return. Corporation tax must be paid electronically within 9 months and 1 day of the end of the company’s corporation tax ‘accounting period’. This will usually be the end of your company’s financial year.

What is the ‘normal due date’?

This is the deadline for paying corporation tax, and will be within 9 months and 1 day after the end of a company’s corporation tax ‘accounting period’.

When is my tax return due?

A company’s tax return must be filed with HMRC within 12 months of the end of its corporation tax accounting period, giving you plenty of time to get it completed.

Who is responsible for calculating the amount of corporation tax due?

A limited company is required to work out its own corporation tax, unlike other types of businesses. The directors are legally responsible for ensuring a company pays the correct amount of tax within the given deadline. Many companies choose to appoint an accountant to make sure it is completed and filed accurately.

Do I need to use an accountant?

It is not a legal requirement to use an accountant, but it can be quite tricky working out a company’s corporation tax if you have no previous experience. For this reason, it would be advisable to consult an accountant or tax advisor to assist you with these all-important matters.

My company is dormant – do I still have to pay tax and file a tax return?

If your company is currently not active, trading or carrying on any kind of business activity, it is considered dormant for corporation tax purposes. In this instance, your company is not liable for corporation tax and you do not have to file a company tax return.

A dormant company can still be liable for corporation tax if it was previously trading and HMRC issues a ‘Notice to deliver a Company Tax Return’. In such cases, the company will have to file a tax return for the period of activity during its most recent accounting period.

A limited company that is dormant should inform HMRC when it does become active. You have 3 months from the start of the tax accounting period to let HMRC know it is active, and this can be easily done using HMRC’s online registration service or by providing the relevant information in writing.

 

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