If you have a Limited Company it is essential to have a basic understanding of the tax the business will pay so you can be prepared for that inevitable tax bill.
To work out the tax liability of a company you need to charge the company's taxable profits by the Corporation Tax rate.
The taxable profits of the company are the yearly profit after adding onto the profit expenses that are not tax deductible such as:
- Client entertaining
- Penalties and fines
- Expenses that are not wholly, exclusively and necessary incurred for a company's trade
You then need to deduct allowances such as:
- Capital allowances
- Annual investment allowance
- Dividends received
Paying Corporation Tax and Filing The Return
The deadline for paying Corporation Tax is 9 months and 1 day after the end of the company's year end, which coincides with the deadline for filing the company accounts with Companies House.
The deadline for filing the company's Corporation Tax return is 12 months after the end of the company's year end, so you need to pay your corporation tax prior to the deadline for filing the return.
Failure to file your Corporation Tax Return and pay your tax liability by these deadlines will lead to penalties and interest being incurred.
Corporation Tax Returns need to be filed in a specific format called IXBRL, so we always recommend that you use an accountant to file your return so that it is accepted by HMRC.
If you would like assistance with your Corporation Tax return get in touch.