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Setting up a limited company - Corporation Tax

What is Corporation Tax and who is subject to Corporation Tax requirements?

Corporation Tax is a tax on the taxable profits of limited companies. So if you're thinking of setting up a limited company this will certainly apply to you.

Taxable profits for Corporation Tax include:

  • Profits from taxable income such as trading profits and investment profits
  • Capital gains - known as 'chargeable gains' for Corporation Tax purposes

If your company is based in the UK, you'll have to pay Corporation Tax on all your taxable profits - wherever in the world those profits come from.

Corporation Tax rates

There are currently two rates of Corporation Tax, depending on the company taxable profits:

  • The lower rate - known as the 'small profits' rate is 20%. This applies to all companies with profits under £300,000 per annum
  • The upper rate - known as the 'full' rate or 'main' rate is 21%. This applies to all companies with profits over £1,500,000 per annum

There is also a sliding scale between the lower and upper rates known as 'Marginal Relief'.

If your company is subject to Corporation Tax requirements you must:

  • Tell HMRC that it is liable for Corporation Tax
  • Pay the right amount of Corporation Tax on time and electronically
  • File a Company Tax Return and supporting documents online and in a particular format

There are different deadlines for each of these requirements. If you do not meet those deadlines, your company may be charged interest and/or penalties. Genie Accountancy will make sure that all these formalities are taken care of – all you need to do is approve the various documents as we send them to you.

Generally you must:

  • Pay by nine months and one day after the end of your company Corporation Tax accounting period
  • File by 12 months after the end of your company Corporation Tax accounting period

For example, if your company financial year runs from 1st April 2011 to 31st March 2012, and your Corporation Tax accounting period is the same, you must:

  • Pay your Corporation Tax for that period by 1st January 2013
  • File your Company Tax Return for that period by 31st March 2013

Our specialist, contractor accountants can go over corporation tax with you in further detail, give them a call on: 01296 468 185

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Genie Accountancy is one of the UK’s most reputable contractor accountant specialists. From help with setting up a limited company and understanding a director’s responsibilities to determining IR35 status and undertaking tax planning. Our Consultants provide all the advice and support required to help you and your limited business.