What is Corporation Tax
When you first start trading, you’ll quickly realise that corporation tax is one of the most crucial taxes to compute and pay. Hopefully, this article will assist you in comprehending the following:
How is corporate tax calculated?
When and how to file a business tax return?
When must this tax due be paid?
Limited firms in the United Kingdom and a few other organisations must pay corporation tax. It is calculated using a company’s annual profits. Although all profits are taxable, certain expenses can be deducted, and there are allowances you can employ to help lower your tax bill. For a limited firm, corporation tax is imposed on the following: Profits from trading are earnings derived from doing business. Investments, Selling assets for a taxable profit, such as land, property, stocks, and machinery.
From April 2023, How The Company Tax Rate Will Vary
The government announced further modifications to the corporation tax rate in Budget 2022.
If your taxable profits exceed £250,000 as of April 2023, you will be subject to a 25% upper limit. If your profits are less than £50,000, you will be liable to a lesser rate of 19%. If your profits fall anywhere between the lower and upper limitations, you’ll pay a marginal rate of 26.5 percent, but you’ll get marginal relief.
Corporation tax rates from 2021-2023
2021/2022 2022/2023 2023/2024
Upper limit – Profits >£250,000 19% 19% 25%
Marginal rate – £50,000 – £250,000 19% 19% 26.50%
Lower limit – <£50,000 19% 19% 19%
When Do You Have To Pay Company Tax?
The deadline for reporting company taxes differs from that of other taxes. It must be paid before your company’s tax return can be filed. This means that the due date is determined by your company’s tax accounting period.
You must pay your corporate tax payment nine months and one day after the conclusion of the preceding financial year’s accounting period. Your bill will be payable on October 1 if your accounting period ends on December 31.
if you would like more information follow this link to HRMC website https://www.gov.uk/corporation-tax
