How to Pay Corporation Tax in the UK
In a similar way that individuals pay income tax on their earnings, UK businesses must pay Corporation Tax on their annual profits. The rate of Corporation tax will differ depending on how much profit your company makes.
From 1st April 2024, the rate for Corporation Tax is as follows:
- Small Profit Rate (companies with profits under £50,000): 19%
- Main Rate (companies with profits over £250,000): 25%
Companies with profits between £50,000 and £250,000 will pay tax at the main rate, reduced by marginal relief. Businesses can use the Marginal Relief calculator to determine how much relief they can claim on their Corporation Tax.
Why Do I Have to Pay Corporation Tax?
All limited companies are required to pay Corporation Tax. In addition, the following organisations may also need to pay it, even if they’re not incorporated:
- Trade Associations
- Housing Associations
- Societies and Members Clubs.
While sole traders aren’t required to pay Corporation Tax, they must still pay income tax on their earnings via a self-assessment tax return.
The company director is responsible for ensuring the timely submission of the Corporation Tax return. To simplify this process, enlisting the expertise of a trusted accountant can ensure all entitled allowances are claimed and forms are completed accurately.
As a leading chartered accountancy practice, we offer outstanding services, tailored to the needs of each client. To find out more, please get in touch with our expert team.
When is Corporation Tax Due in the UK?
You must submit your Corporation Tax return either 12 months after the year-end, or three months after you receive a notice to submit a return from HMRC.
However, there are circumstances in which you may need to pay your bill before the due date. These include:
- If your company has made a taxable profit of up to £1.5m
In this instance, you’ll need to pay the Corporation Tax within nine months and one day following the end of the accounting year. - If your company has a turnover of over £1.5m
Your corporation Tax will need to be paid in instalments.
How to File Corporation Tax
Companies must file their Corporation Tax return to HMRC online. To do so, businesses must register with HMRC and obtain a user ID and password.
Your accounts must also be filed with Companies House, either online or via post. There is an option to file your accounts and Corporation Tax jointly via the HMRC website.
What is my Corporation Tax Reference?
Your Corporation Tax reference, also known as the Unique Taxpayer Reference (UTR), is a 10-digit number that is assigned to your business by HMRC and is used to identify your company for tax purposes.
Your UTR can be found on your company’s incorporation documents and on your business’s online account with HMRC under the “Your Account” or “Company Details” section.
If you’re struggling to find your reference number, you can contact Companies House and ask them to provide it.
If you’re a new business and haven’t yet received a UTR, you can receive one by registering your company for Corporation Tax with HMRC. This can be done by filling out a CT41G form. Once the form is completed and sent to HMRC, your business will be assigned a Corporation Tax reference number.
How to File Corporation Tax For a Dormant Company
If your company has stopped trading and is receiving no other income, you can inform HMRC that it is dormant for Corporation Tax.
In addition, a business may be considered dormant if:
- It is an unincorporated association or club owing less than £100 Corporation Tax.
- It is a flat management company.
If you’ve filed a Company Tax Return or had a ‘notice to deliver a Company Tax Return’, this will still need to be filed online. This document will show HMRC that your company is dormant for this period.
Once HMRC has been notified that your company is dormant, you will not need to pay Corporation Tax, unless requested to do so. However, must still file annual accounts and a confirmation statement.
Enlist Our Experts
Now that you know how to pay corporation tax in the UK, why not let our experts handle it for you?
At Hartley Fowler, we’re pleased to provide our clients with outstanding accountancy services. Regardless of whether you’re a director, self-employed, partnership or corporation, our Corporation Tax services can ensure that payments are determined on time, after careful consideration and in accordance with all the relevant legislation.
To find out more about how our Corporation Tax services can assist you in simplifying your annual processes, please contact us today. Alternatively, to discuss your tax needs in more detail, book a free consultation with one of our team.