Corporation tax returns can feel like a necessary evil for business owners. If you want to make this time less stressful and the return process smoother, then we have all of the advice you need about how and when a corporation tax return form should be submitted.
Understanding Corporation Tax
You should pay corporation tax on profits from doing business as a limited company, any foreign company with a UK branch or office or unincorporated associations e.g. co-operatives, community groups or sports clubs.
The current corporation tax rate is 19% of taxable profits. If the corporation tax rate changes during your accounting period, the taxable profits will have to be apportioned accordingly to calculate the effective tax rate at which to pay corporation tax. When you submit corporation tax returns online, you will also need to inform HMRC of which tax years your accounts fall into.
There are allowances and reliefs available to corporation tax, for example, claiming capital allowances. These can allow you to deduct certain expenses like equipment and machinery from your overall corporation tax bill. By understanding where it’s possible to deduct these, you have the potential to decrease your bill significantly.
In the case of trading losses, property income losses and other losses these can also be used to mitigate your corporation tax liabilities. Working with an accountant that understands this complex system will help you to find areas in which you can reduce that final cost.
Corporation Tax Return Deadline
The deadline in which to file corporate tax returns for your business will depend on the end of your accounting period. The corporation tax return must be submitted no later than twelve months after the end of your accounting period.
The tax owed must then be paid within nine months and one day for companies with taxable profits of up to £1.5 million. For those with taxable profits of more than this amount, the payment must be made in instalments.
Business owners with limited companies must register for corporation tax or reregister a dormant business to be able to be assessed for corporation taxation. This process is a relatively simple and can be completed through the government portal.
Paying Corporation Tax
There are a few different ways to pay your corporation tax, though it’s no longer possible to pay this at a Post Office. It’s essential to factor in the processing time for the payment into the corporate tax return due date; otherwise you may be charged interest on the due amount if late payment is made.
The fastest ways to pay this are online, over the phone or via CHAPS. If you don’t have a lot of time to spare, then these can be made the same or next day. Paying via CHAPS, online or over the phone is preferred to payments made via direct debit, which can take up to five working days to clear.
If you need help with your corporation tax calculations and returns in the upcoming financial year, then don’t hesitate to get in touch. At Profile, Chartered Accountants we specialise in helping businesses just like yours to make the most of their capital and business resources. Talk to us for advice on how we can help you with your unique corporation tax situation.