The most straightforward approach to describe corporation tax is to state that it is your company’s version of income tax. Instead of paying income tax to HMRC on our revenues, your company will pay corporation tax.
Your firm will be charged at a specific rate according to its profit in a financial year. However, corporate tax rates are lower than those for individual income tax.
You can choose the corporation tax filing service to manage your books and maintain the corporation tax guideline for your company.
Does the business need to register for corporation tax?
Without Companies House registration, you can start and run your firm. Since only businesses that are registered with HMRC are subject to corporate taxes, you do not require a corporation tax return file.
For those who operate a successful firm, employing company forms to transform their organization into a Limited Company offers certain benefits.
If you’re considering starting a business, it’s a good idea to learn about the benefits and drawbacks of creating a limited company.
You’ll see how taking this path can protect your assets if something goes wrong with your company. Because of this benefit, forming a limited liability corporation is a smart option.
Registering for corporation tax for your company:
One of the first things you’ll need to do after forming your company is register for corporation tax. Within three months of starting your firm, you must register it for corporation tax. You risk incurring a significant financial penalty, so don’t put it off if you do not enroll on time.
A 10-digit Unique Taxpayer Reference (UTR) is required in order to register for corporate tax. Before you may register for company tax online, you must have this identification number.
After your business is registered with Companies House, HMRC will issue you your UTR number within a few working days. Your UTR may be requested online or by calling HMRC at 0300 200 3410 or +44 151 268 0504.
When registering for corporation tax at HMRC, you need the following information:
- Your company’s registration number (UTR) unique taxpayer reference
- Your business’s inception date. This is the beginning of the first accounting period for your company.
- the day your yearly accounts are invented
How much is corporation tax?
Corporation tax rates are now 19 percent for all companies. By 2020, the government pledged to cut the company tax rate each year, with a target of 17 percent. To the tax rate for unit trusts and open-ended investment businesses, an extra 20 percent is added to the rate.
For up-to-date information on the most recent rate adjustments, you may check the current company tax rate online.
If my firm is a corporation, when should it pay tax?
Corporate tax payment dates differ from those for other business taxes such as VAT and income tax. This perplexes the numbers of current business owners. Before you may file your company’s tax returns, you must also pay corporation tax.
In accordance with the laws, you are required to pay company tax in less than nine months and one day after the expiration of your previous accounting period fiscal year. It is common for the accounting period of a corporation to finish on March 31. Your corporate tax is due on January 1 of each year.
Two accounting periods during the first year of trading might be confusing for newly formed firms.
Corporation tax needs to be paid in installments if your firm generates profits above £1.5 million.
Profits are the basis for corporation tax. Because corporation tax is dependent on earnings, you will not be responsible if your company does not make a profit. To keep HMRC informed of your financial situation, you will need to report that you owe nothing.
A penalty from HMRC will result if your accounts are not up to date and Corporation tax is not paid on time.
Is my firm eligible for any tax breaks or subsidies?
Your registered business is entitled to various concessions, such as the ability to deduct operating costs from earnings. Certain costs are permitted, while others are not. It is only permissible to claim costs that were incurred completely, entirely, and absolutely in the process of conducting your business.
In other words, you cannot claim costs that serve both personal and commercial purposes. Always retain all invoices and receipts so you can substantiate your claims and costs as they are valid.
The Procedure for paying Corporation Tax?
The HMRC website allows you to pay corporate tax online. You can pay with such a debit card or a business credit card; however, using a company credit card incurs a fee. A personal credit card is not accepted for payment.
As a reference, you’ll need the 17-character Corporation Tax pay slip number. This information may be found on any payslip you received from HM Revenue and Customs (HMRC).
Through the HMRC online account for your firm.
You may also use HMRC’s online services to set up a direct debit to pay your corporation tax. You can also make quicker payments by using internet banking. Especially if your corporation’s tax deadline is fast approaching, this may be quite beneficial. HMRC will want the tax reference number of your firm along with the bank account details.
Ensure that your business’s taxes are paid on time. If you’re having difficulties doing it on your own, consider hiring a professional, it’s an excellent idea to hire an accountant to manage your business finances and file your tax and VAT returns for you.