Home / Corporation Tax
Updated on : 10-Dec-2024 06:48 PM GMT | 4 min read
What is Corporation Tax?
Corporation tax is a tax calculated on the basis of annual profits of the company and paid to HMRC annually. After April 2015, the corporation tax rate for all limited companies is 19%. Before April 2015, corporation tax was not fixed and varied on the basis of company’s profits. In order to pay corporation tax, you need to submit company tax return via form CT600 to HMRC annually.
Every limited company should pay corporation tax to HMRC before the deadline i.e. 9 months & 1 day after the end of the accounting period. The deadline for submission of company tax return is generally 12 months after the end of the accounting period.
Who pays Corporation Tax?
Corporation tax on profits are paid by all UK limited companies, any foreign company having branch or office in UK, any club or cooperatives or other incorporated associations etc. There are some organisations which are not incorporated but still they need to pay corporation tax. They are as follows -
- Housing associations
- Trade associations
- Member clubs, societies & associations.
- Group of individuals running a business (For example – Co-operatives)
There is no need to pay corporation tax in case of sole trader or partnership firm. In such cases, tax on profits will be paid through self-assessment tax return. Company director is responsible for ensuring that whether the corporation tax return has been submitted and tax bill has been paid on time or not . If it has not been paid on time, you need to face the fines & penalties imposed by HMRC.
