What is corporation tax? Corporation tax is a tax on the taxable profits of all UK limited companies or non-UK companies trading in the UK. Taxable profits for corporation tax include profits from income such as trading/investment profits (except dividend income), rental income and capital gains. Once you have set up a UK limited company you will have to pay corporation tax on all taxable profits wherever in the world those profits come from.  However if your company isn’t based in the UK but operates in the UK through an office or permanent establishment (branch) then usually only the taxable profit from the UK activities will be taxed in the UK.

If your new company formation is subject to corporation tax requirements you must:

1.)     Inform HM Revenue & Customs that your company is liable for corporation tax, normally within three months of your incorporation

2.)     Pay the right amount of corporation tax on time

3.)     File a company tax return and supporting computations.

Deadlines differ for these three requirements and if you do not meet these deadlines you may be charged interest or penalties.

Normally, you must pay any tax due within 9 months of the end of your company’s corporation tax accounting period and file the company tax return within 12 months of this accounting period.

How do I calculate my taxable profits?

-          You start with your company’s pre-tax figure from the  financial accounts for the financial year.

-          Add back any depreciation charges you have included in your accounts

-          Deduct capital allowances

-          Add any other income or chargeable gains

-          Deduct any other relevant deductions/reliefs/allowances or losses and adjust for any disallowable items.

You can then apply the relevant tax rate(s) to this figure to calculate the tax payable.

Wisteria Formations can set up your company and introduce youto one of Wisteria Ltd’s Chartered Tax Advisers who can further explain the Corporation Tax requirements and can assist with tax planning requirements.

Now that you understand your corporation tax duties as a new limited company, please follow the link below to start your company incorporation.

https://www.wisteriaformations.co.uk/uk_company_registration

Wisteria Formations support team are happy to answer any further questions you may have or pass you onto a Chartered Accountant or Tax Adviser, please call 0844 893 0808.