When you’re starting your own business, you will likely come across several things for the first time - including corporation tax. This guide will tell you everything you need to know to prepare to pay corporation tax for the first time.
What is corporation tax?
Corporation Tax is a tax on profits that all limited companies and foreign companies with a UK branch or office have to pay.
Unlike other taxes, corporation tax is self-assessed, which means that it is up to you to work out how much has to be paid to HMRC.
When does my company have to register for corporation tax?
Once you’ve registered your company with Companies House, you will also have to register it for corporation tax. Many companies choose to register both of these, as well as PAYE as an employer, at the same time.
Registration must be done within three months of business activities taking place. If registration is completed after this point, then you run the risk of being fined.
How to register my company for corporation tax?
If you’ve already registered with Companies House, then you will have received your 10-digit Unique Taxpayer Reference (UTR).
You will need this along with your company’s registration number, the date your company started business activities as well as the date your annual accounts are made up to.
You can begin the process by logging in to the Government website. You will need your company’s Government Gateway user ID and password to do this. If you don't already have your user ID, then you can create one once you log in.
Registering to pay corporation tax can be done in a matter of minutes and really doesn’t require any prior expertise. Nevertheless, many companies choose to outsource this task to their accountants at often considerable expense.
When do I have to pay corporation tax?
HMRC will provide you with a deadline for when you have to pay your corporation tax. This is typically nine months and one day after the end of the accounting period.
Regardless of whether you make any profit, you will still have to file a Company Tax Return. The deadline for this is 12 months after the accounting period it covers.
If it’s submitted after the deadline, then there will be a penalty fine of at least £100.
Corporation tax and Payfit
As previously mentioned, companies will generally register for employer PAYE at the same time as they register for corporation tax. Again, this isn’t the hardest thing in the world, but businesses will often ask their accountants to do this for them on their behalf. They may even ask their accountants to run payroll for them on their behalf, but we at PayFit think there’s a better way.
Our hybrid payroll and HR cloud solution offers the best of both worlds: the support you’d normally associate with outsourcing, but with the flexibility of an in-house solution. By removing all the tedious manual processes that are normally associated with payroll, as well as automating everything from RTI submissions and payslips to employee leaves and expenses, a monthly payroll run can be completed in just a few minutes.
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