A Limited Company registered in the United Kingdom is required to submit accounts and a company tax return to HMRC each year. All companies are encouraged to have their own HMRC business tax account, as this gives the company instant and up-to-date access to information about the amount of tax that is due, the date on which it is due, and how to make payments.
Setting up a business tax account
In order to set up a business tax account, a company will need its UTR (Tax Reference number – usually 10 digits) and Company Registration Number (usually 8 digits). A business tax account is set up on the HMRC website. You will be provided with a Government Gateway ID, which will need to be verified, and a password.
Once you have access to the business tax account, then depending upon the size of your business, it may be possible to submit the relevant information from your accounts to HMRC, and then prepare the company tax return. This is a simple process of following the links provided, and then entering the information as you go along. Once complete, you will be presented with the amount that the company owes.
Calculating the taxable profit
Generally, a company in the United Kingdom pays Corporation Tax at 19% on the taxable profit of the business. The taxable profit may differ to the net profit of the business, as various factors can affect the profit chargeable to tax. For example, certain expenses that a company incurs are not tax-deductible, but some costs that are not shown in the Profit and Loss Account can be set against the taxable profit.
If a company makes a taxable loss, then there would not be a tax charge for the year. Instead, that loss can either be carried back one year to set against the previous years’ profits, and generate a repayment, or the loss can be carried forward indefinitely to set against future profits.
Payment of tax
Corporation tax is due for payment 9 months and 1 day after the year-end of the company, so a company with a year-end of 31 December is liable to pay corporation tax on 1 October the following year. Payment dates will be adjusted if the company extends or shortens its accounting period.Sign up in minutes
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About the author
Seymour Griffiths is a Director based within our Aylesbury office of Haines Watts. He is a Certified Chartered Accountant and Chartered Tax Adviser.
Seymour oversees a team caring for accounts, personal and business tax, and management reporting for Sole-Traders, Partnerships and Limited Companies. Over the years, Seymour has worked with clients based both in the local area, and further afield, including some overseas assignments.