Corporation Tax

Corporation Tax

Once you have registered your limited company with Companies House, HMRC should be advised that your company exists. HMRC will then contact you and ask you to complete a form CT41G confirming your company details. This form will indicate the company’s Unique Tax Reference (UTR), which is a ten digit number, and the company’s allocated HMRC Tax Office. 

Calculating and Paying Corporation 
Tax Corporation tax is paid by the limited company on its net profits after allowable expenses and capital allowances. Corporation tax is always calculated based on the accounting period to a maximum of 12 months. If your accounting period is more than 12 months, you will need two tax returns to cover the period.

The Corporation tax rate depends on the level of profits made by the company. There are two main rates of Corporation tax, one for small companies and one for large companies. There is an effective “marginal” tax rate for profits falling between the small and large company profit thresholds. Corporation tax must be paid to HMRC nine months and one day after the accounting period.

Tax Planning
As the tax is not payable until nine months after the first accounting period, it is advisable to try and reserve some funds over the course of the year in preparation of this. There are measures you may wish to consider to reduce your tax liability, including investment in qualifying assets for the company. Capital allowances can be claimed on some items of office equipment, fixtures and fittings and plant and equipment. It is important to understand the annual allowances and rates available for capital allowances before you reach the end of your accounting year. You may also wish to consider other items, including additional employer pension contributions or staff bonuses, if appropriate.

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