In simple, Corporation Tax is the 20% tax you pay on all profits your company makes. So as a quick example, if your company made £100,000 in profit then you would need to pay £20,000 in Corporation Tax.
As the name suggests, Corporation Tax doesn’t apply to self-employed individuals, it’s a tax that is purely for companies that are:
- Any type of Limited Company
- A foreign company with a UK branch/office
- A club, co-operative or any other ‘unincorporated association’
Unlike many other taxes, you wont receive a bill for your corporation tax, it is something you need to calculate and pay yourself. In order to do this you will need to complete the following steps:
- Keep all accounting records up to date
- Prepare (fill in but don’t submit) your Company Tax Return to calculate how much Corporation Tax you owe
- Pay your Corporation Tax or report that you have nothing to pay by your deadline (typically 9 months after your ‘accounting period’)
- File your Company Tax Return by your deadline (typically 12 months after your ‘accounting period’)
Your deadlines are specific to your company, the day your company was formed is the start date of your ‘accounting period’.
That is Corporation Tax in a nutshell ladies and gents!
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