Corporation Tax Service in Manchester
As a limited company business owner, you are responsible for calculating the company’s tax liability and filing a return to HMRC. It’s fair to say that it’s no-ones favourite task, and the rules can often be mind-boggling. Fortunately, Quay Accountants are here to make filing returns and paying Corporation Tax a whole lot easier.
What is Corporation Tax?
Corporation Tax is paid on the profits made by a limited company. It is charged in line with the company’s profit and must be paid to HM Revenue & Customs (HMRC) each year.
Who pays Corporation Tax?
All limited companies in the UK are legally required to register with HMRC and pay Corporation Tax. The company directors are responsible for calculating their income, expenses and profit and must declare them by way of a company tax return at the end of each accounting period.
Failure to file company accounts, mistakes or late entries are all penalised by HMRC.
If you are not an accountant, it is common to encounter pitfalls when dealing with Corporation Tax. For friendly advice in no-nonsense language, contact the team at Quay Accountants.
We can take on the burden of calculating and filing your company tax return to make your life easier and avoid nasty fines.
What is the Corporation Tax rate?
Corporation Tax is charged at a rate that corresponds to a company’s profits. As of April 2023, the rates are as follows:
- Small business rate – profit < £50k – 19%
- Main rate – profit > £250k – 25%
For those companies with profits between £50k and £250k, there is marginal relief, which basically means the rate of tax gradually increases in line with profit.
How much Corporation Tax will I pay?
A Corporation Tax bill is worked out by calculating the company’s income (from trading, investments, interest and capital gains) and reducing it by the total allowable expenses (e.g. business costs such as salaries, rent and other overheads). This figure is known as the company’s taxable profits.
The total is multiplied by the relevant tax rate. For example:
- Income from trading = £310,000
- Income from gains on the sale of assets = £20,000
- Less expenses = £10,000
- Taxable profit = £320,000
- Taxed at main rate = £320,000 x 25%
- Corporation Tax bill = £80,000
When is the Corporation Tax deadline?
The deadline is nine months and one day after the end of the company’s accounting period, which can differ. For example, if your accounting period ended on 31st December, then your filing and payment deadline would be 1st October.
Generally, companies with a taxable profit of up to £1.5 million can pay their Corporation Tax in two instalments.
Outsource your company tax return to Quay Accountants
By outsourcing Corporation Tax to Quay Accountants, you can free up your valuable time and be confident that your returns are made to HMRC correctly and within the deadline. We have years of knowledge and experience and know tax legislation inside out. The team is always on hand to answer your tax questions in plain English.
Our friendly and down-to-earth team are ready to receive your enquiry. Please drop us a line, and we will be in touch.
Corporation Tax - Frequently Asked Questions
Do I need to send company accounts to Companies House?
Limited Companies must register with and file their annual accounts to Companies House.
The reason is to provide evidence of the company's financial health so that potential investors, creditors and customers can assess the financial position of a business.
It also allows Companies House to monitor business activities and check that companies are not breaking any rules or committing fraud.
What is the AIA limit?
AIA stands for Annual Investment Allowance and is the amount of money businesses can spend on plant and machinery each year without tax implications.
As of April 2023, businesses can claim 100% of expenditure up to the limit of £1m, which is set to remain in place until at least 2026.
Do companies pay Capital Gains Tax?
Capital Gains Tax (CGT) is a personal tax paid by individuals on the gains they make from selling assets. Companies are not subject to CGT; instead, any chargeable gains must be declared on their Corporation Tax return.