Corporate tax planning is an important, but often overlooked part of a business’s annual plans.
Most businesses, think that corporate tax is simply a calculation at the end of the normal accounts process, and that you need expensive advisors and large management boards before even bothering trying to make it efficient as possible.
At Hamlyns we don’t do complicated tax avoidance schemes, rather we prefer to think about the effects of corporate tax as part of your future business plans.
We can help, as part of your financial planning, suggest ways that you can gain the maximum relief.
If you’d like to know more, or need advice please contact us.
What is Corporation Tax?
Corporation tax is the tax that companies pay on their profits, instead of income tax or national insurance.
What is the rate of Corporation Tax in the UK?
For the 2018/19 tax year the rate of corporation tax in the UK is 19%.
What do you pay Corporation Tax on?
Corporation tax is calculated at the relevant corporation tax rate (or pro-rated rates if the company’s financial year straddles the tax year) on the company’s profit at the end of it’s financial year, after adding back disallowed expenses such as depreciation, and deducting capital allowances.
Do small businesses pay Corporation Tax?
Yes, all limited companies are subject to the corporate tax regime in the UK, though they may not have any tax to pay if the company has made a loss, or has carried forward losses from previous years. Though, unincorporated businesses, such as partnerships, LLPs and sole traders pay income tax rather than corporation tax, which has different rates and rules.
Do you pay Corporation Tax on a loss?
No, generally speaking you will not pay corporation tax on a trading loss, however if your loss has been generated by things like high depreciation rates or through losses on sales of plant and machinery and other fixed assets. There may be other instances where you have an accounting loss but not a taxable loss.
When should I pay Corporation Tax?
Generally our corporation tax must be paid 9 months and 1 day after your company’s year end. For example, a company with a year end of 31 March must pay it’s tax by 1 January the following year. Large companies, generally with profits above £1.5m have to pay corporation tax in instalments.
How do I pay my Corporation Tax?
You can pay your corporation tax online by debit or corporate credit card, BACS and CHAPS transfer using internet banking, or set up a direct debit. In exceptional circumstances HMRC may agree payment plans for settling corporation tax.
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