What is Corporation Tax and what are the current rates?

If you’re a limited company based in the UK then you’re subject to paying Corporation Tax on your taxable profits. You’re also eligible if you’re a foreign company with a UK branch or office, or a club, co-operative or other unincorporated association, for e.g. a community group or sports club.

The current Corporation Tax rate is 19% for companies with profits under £50,000, and 25% for companies with profits over £250,000. This differs from previous years where a single rate was applied to all companies.

Companies with profits between these thresholds may be entitled to “Marginal Relief”, which allows the tax rate to fall between the existing rates and can be calculated on the HMRC Website, here.

It is your responsibility to let HM Revenue and Customs (HMRC) know that your business is liable for Corporation Tax, and to calculate the amount of tax your company owes. This amount should be paid within nine months of the end of your firm’s accounting period. You must also report if you have nothing to pay.

Large companies with taxable profits of more than £1.5 million should pay in instalments, although there are a number of exceptions to this.

Failure to tell HMRC that your business is liable for Corporation Tax, or failure to pay on time may result in a penalty. Penalties are calculated by applying a percentage to the amount of tax that you owe; that percentage will depend on the type of error, or failure, made.

We can help you with the Corporation Tax process by:

  • Informing HMRC that your company is liable for Corporation Tax
  • Working with you to calculate how much you owe, and ensuring that you meet your deadline
  • Establishing any allowances and reliefs your business may be eligible for

For more information and advice about Corporation Tax please contact us on 0115 824 0555 or email us via our contact form below.

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