Our tax preparation specialists tell you all how much your company will have to pay
At DSR Tax Refunds Ltd, we know that working out your company’s finances is hard work, and that’s before you have to deal with your Corporation Tax bill. That’s why our experts want to help make life as easy as possible for you by sharing our specialist knowledge with you. So, whether you are wanting more information about VAT or need to know about charitable tax relief, our handy guides are here to help. All our information is based on HMRC sources, so you can rest assured that these guides are filled with helpful and accurate information.
What is Corporation Tax?
Corporation Tax is a tax on any profits that your business makes. The types of organisations which are required to pay Corporation Tax are:
- Limited companies
- Foreign companies which have a branch or office within the UK
- Unincorporated associations, such as clubs, co-operatives or community groups.
How do you pay Corporation Tax?
HMRC doesn’t issue tax bills for Corporation Tax – instead, the company is responsible for working out, reporting and paying its Corporation Tax to HMRC.
To do this, you need to take the following steps:
- You must register with HMRC for Corporation Tax when your company starts doing business or you restart a dormant company. If you are running an unincorporated association, you need to write to HMRC to register.
- You need to keep accounting records and prepare a Company Tax Return for your financial year. These will help you work out how much Corporation Tax you need to pay.
- You will need to pay Corporation Tax to HMRC, or report that you have nothing to pay, by your deadline, which is usually 9 months and 1 day after the end of your ‘accounting period’.
- Finally, you will need to file your Company Tax Return by your deadline, which is usually 12 months after the end of your ‘accounting period’
Your accounting period usually covers the same 12 months as the financial year covered by your annual accounts. If you are just starting a business or closing one down, this may differ.
What do you pay Corporation Tax on?
You have to pay Corporation Tax on your taxable profits, so that is the money your business makes from trading (or doing business), selling any assets for a profit (also known as chargeable gains) or any investments it has.
If your company is UK-based, it must pay Corporation Tax on all its profits from UK and overseas income.
If your company is not based in the UK but does business in the UK it only pays Corporation Tax on the profits it makes from its UK activities.
What do you need to do if you are stopping a business?
If your company is no longer trading or active, HMRC may consider it to be ‘dormant’. HMRC may write to you to inform you that they have classed your business (or association) as dormant so you don’t need to file a Company Tax Return or pay Corporation Tax.
If you think your company or association is dormant, but HMRC haven’t written to notify you of this, you can inform HMRC that it is dormant and no longer meets the Corporation Tax requirements. If you’ve never received a ‘notice to deliver’ a Company Tax Return from HMRC, you can inform HMRC of your company’s dormant status over the phone or by post.
However, if HMRC have send you a ‘notice to deliver’ or you have filed a Company Tax Return in the past, you will need to send a Company Tax Return online showing that your company or association is now dormant. Once HMRC recognise your company or association as dormant, you won’t be sent another ‘notice to deliver’.
What happens if you restart a dormant company?
You will need to inform HMRC if you have a dormant or non-trading limited company which starts trading again. You can do this by logging into your company’s Government Gateway account. You will then be expected to put together your company statutory accounts and Company Tax Return after your financial year end.
If your company has never traded before, you will need to register it with HMRC.
How can you get help with Corporation Tax?
If you are running a business or association and need help with your Corporation Tax, you can appoint an accountant or tax adviser who can help you make sense of it all and make sure your accounts are in good order, including working out how much Corporation Tax you need to pay.
You can also contact HMRC’s Corporation Tax helpline on 0300 200 3410 if you have any queries. They are open on Mondays to Fridays, from 8am to 6pm.
How can DSR Tax Refunds Ltd help?
We know that setting up a business can be hard work – there’s so much to think about and that’s before you start thinking about your Corporation Tax responsibilities. Our friendly team of tax specialists at DSR Tax Refunds Ltd are on hand to help make life easier for you. We’re the experts at identifying your maximum allowable expenses so call us on 0330 122 9972 – we’re the tax experts you can trust.