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Rates & Deadlines to Pay Corporate Taxes in UK

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Pay Corporate Taxes in UK

Rates & Deadlines to Pay Corporate Taxes in UK

If you are a start-up business in the UK and wondering about what corporate taxes in UK are, when to pay them, and what rates to work with, then you’re reading the right article. Of course, if you do not have a background in accounting and financing, hiring our tax accountant in the UK can relieve you from unnecessary stress. Even if you are not a start-up but need to understand how corporate taxes work, keep reading.

Let us take you through the preliminaries.

What is Corporation Tax?

This tax applies to limited companies and is an amount they must pay to the government on their profits. The company also must pay the corporate tax upon selling assets like land, machines, equipment, and company shares. Corporate tax is an income tax for companies. Therefore, once you start your company, you need to pay the government 19% of the profits as tax (unless there were losses in the previous year). For more information, Tax Advisor UK can guide you on what you need to know.

What are the Corporation Tax Rates?

As mentioned earlier, the rate the company must pay is 19%, which is a standardised rate for all businesses in the UK. Back in 2016/2017, the rate was 20%. Before April 2016, the rate varied with the profits a company made. The present government aims to keep corporation tax rates low.

In 2020, by April the tax rate was supposed to depreciate further t0 17%. However, the government announced that the rate will remain at 19% for 2020.

How Much is Corporation Tax for a Limited Company?

Here’s what you need to know:

When is Corporation Tax Due?

To be able to manage your corporation taxes easily, it is necessary to have a tax accountant in the UK. Things get complicated because the deadlines vary and depend on your accounting period. A qualified accountant can help you manage all the hassles. Here are some important things you need to keep in mind:

  • You must pay the tax before you file tax returns
  • The deadline to pay the tax is usually nine months and a day after the end of your company’s accounting period ends. Assuming your accounting period ends on 31 March, the deadline for your corporation tax is 1 January.
  • You will need to work out how much corporation tax is due even if the deadline to file your tax is 12 months after your company’s accounting period ends.

If you have a small start-up business, you can have two corporation tax accounting periods. This is because you cannot have an accounting period that is longer than 12-months. That is to say that if your business started in January, your first accounting period will be 31 March. After this, you start a full 12-month accounting period.

Note, however, that in the UK, businesses that make profits of more than £1.5 million must pay corporation tax in parts. Their process is different. If the company is in losses, you do not have to pay corporation tax. However, you need to declare this to the HMRC. For this, you will require a tax advisor in the UK to help. At Tax Advisor UK, you can find professionals to assist you.

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