Subscribe to Our Newsletter

Subscribe to our newsletter to stay updated on our news

Please enter a valid email address.
Please check the required field.
Something went wrong. Please check your entries and try again.

Our Guide to Corporation Tax Rates

BILLY EDWARDS

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.

At present the Corporation Tax rate for a Limited Company is 19% of the businesses taxable profits, which at the date of this article are expected to decrease to 17% from 1 April 2020.

Taxable Profits

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

– Depreciation

– 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

Example

Tax rate: 19%

Annual profit: £50,000

Client entertaining: £500

Penalties: £200

Dividends received: £2,000

Capital Expenditure: £3,000

Based on the above the taxable profit for the company would be £45,700.

Based on the tax rate for the 2019/2020 tax year the company’s tax liability for the year would be £8,683.

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 call Edwards Bailey Chartered Accountants on 01708 200675 or email us at info@edwardsbailey.co.uk.

Related Articles

pexels-karolina-grabowska-5980866

Tax on Cryptocurrency: An Overview of the 2022/2023 Tax Rules

Tax on Crypto Currency Cryptocurrency has become a popular investment option in recent years, with the rise of Bitcoin and other digital currencies leading the way. However, the tax implications of holding and trading cryptocurrency can be a minefield. In the UK, cryptocurrency is subject to capital gains tax, and in some cases, income tax…

business-blocks

The Right Business Structure: Pros and Cons

The Right Business Structure for You Starting a business can be an exciting and challenging time. Choosing the right business structure is an important decision that can affect the success of your business. In this article, we’ll explore the most common business structures in the UK and help you understand the advantages and disadvantages of…

Employee Tax Return

Do I Need to File a Tax Return If I Am Employed?

Do Employees Need to Complete a Tax Return? Most of the time you do not need to complete a self assessment tax return if you are employed and have no other sources of income. However, there are exceptions to this such as: That’s why we’ve put together this guide to help you understand everything you…

Get In Touch

If you would like to discuss the services we offer or for a no obligation quote please contact us using the details on the right.

"*" indicates required fields

*
This field is for validation purposes and should be left unchanged.