Corporation tax
Corporation tax is paid by limited companies
on their profits. It is also paid by:
- members' clubs, societies and associations
- trade associations
- housing associations
- groups of individuals carrying on a business
but not as a partnership, e.g. co-operatives,
even if they are not limited companies.
Corporation tax is paid (2008-2009 rates) at
the small companies’ rate of 21% for profits
of up to £300,000 and a main rate of 28%
for profits of over £1.5 million.
Companies making profits between £300,001
and £1.5 million receive marginal rate
relief, which eases the transition between the
lower and higher rates.
If your company is liable to pay corporation
tax, you must:
- Tell HM Revenue & Customs (HMRC) that
your company exists and that it is liable for
tax.
- File a self-assessment tax return for your
company, on which you calculate your own corporation
tax liability and pay it without prior assessment
by HMRC.
- Keep records of all company expenditure and
income in order to work out your tax liability
accurately.
How to pay: Corporation tax
is normally due by nine months and one day after
the end of your company’s accounting period.
So if your company tax return covers an accounting
period 1 January 2008 to 31 December 2008, Corporation
Tax must be paid no later than 1 October 2009.
If you don't let HMRC know that you are liable
for corporation tax, file your company tax return
incorrectly, or pay your corporation tax late,
you may incur a financial penalty. If you don't
pay your corporation tax on time, HMRC will charge
interest from the day it is due until you pay
it.
Seeking professional advice is a wise step to
ensuring that your financial affairs are as tax-efficient
as possible.
HMRC recommends that corporation tax payments
are made electronically, for example by direct
debit, Bank Giro or via the Post Office
For more information, visit
http://www.hmrc.gov.uk/ct/index.htm
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