Understanding UK Corporation Tax

Understanding the UK Corporation Tax basics

Corporation Tax

Want to know the basics of Corporation Tax in he UK?

You must pay Corporation Tax on profits from doing business as:

  • a limited company
  • any foreign company with a UK branch or office
  • a club, co-operative or other unincorporated association, eg a community group or sports club

You don’t get a bill for Corporation Tax. There are specific things you must do to work out, pay and report your tax.

  • Register for Corporation Tax when you start doing business or restart a dormant business. Unincorporated associations must write to HMRC.
  • Keep accounting records and prepare a Company Tax Return to work out how much Corporation Tax to pay.
  • Pay Corporation Tax or report if you have nothing to pay by your deadline – this is usually 9 months and 1 day after the end of your ‘accounting period’.
  • File your Company Tax Return by your deadline – this is usually 12 months after the end of your accounting period.

Your accounting period is normally the same 12 months as the financial year covered by your annual accounts.

Profits you pay Corporation Tax on

Taxable profits for Corporation Tax include the money your company or association makes from:

  • doing business (‘trading profits’)
  • investments
  • selling assets for more than they cost (‘chargeable gains’)

If your company is based in the UK, it pays Corporation Tax on all its profits from the UK and abroad.

If your company isn’t based in the UK but has an office or branch here, it only pays Corporation Tax on profits from its UK activities.

Stopping or restarting business
Check what you have to do if:

  • you’re not doing business and qualify as ‘dormant’
  • you restart your business (You must tell HM Revenue and Customs (HMRC) if your non-trading or dormant limited company starts trading again)

Get help
If you need help with Corporation Tax, you can:
appoint an accountant or tax adviser to help you.  Feel free to contact us.

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