Paying corporation tax is an important and unavoidable part of business. We know it can be slightly overwhelming to keep on top of tax returns, especially when it comes to making sure they’re submitted on time. But don’t worry - we’re going to take you through the ins and outs of corporation tax returns to help you figure it out. So let’s get stuck in!
Corporation tax (also known as corporate tax) is the amount you owe based on your net income. It’s generally calculated from the profits you make in the following areas:
It’s also worth noting that, as a UK-based company, you’re still liable to pay corporation tax on any profits you make overseas as well as in the UK.
The amount you owe varies depending on how much profit you’ve made throughout the year. For 2018 the main rate was 19%, but this could change in the future - so make sure you keep up to date with HMRC’s rates and allowances!
It’s pretty easy to know if you should submit a corporation tax return. To put it simply, if your business is one of the following then you have to submit the form:
It’s as simple as that!
Unfortunately, you don’t get a bill or invoice for your corporation tax. If only it were that easy! Instead, you have to file a corporation tax return - otherwise known as a CT600 form - to work out how much corporation tax you owe.
Here are the steps provided by HMRC:
And remember - even if you don’t actually have to pay any corporation tax, you still have to submit your return. Otherwise, you could be hit with a nice juicy fine from HMRC - hmm, no thanks! We’re sure you have better things to be spending your money on.
In April 2019, HMRC is launching a new initiative called Making Tax Digital. The plan is that all VAT registered businesses earning above £85k will keep digital records and submit their VAT returns using compatible accounting software. This’ll potentially affect the way you submit your corporation tax, but don’t worry if you’ve never heard of it before. Head over to our Making Tax Digital blog post for all the information you need!
You might’ve finished reading this and thought to yourself, wow, I really don’t want to deal with this - it’s given me a headache just thinking about it!
Well, you’re in luck! Mazuma offers a simple and easy-to-use accountancy service, and we’d love to help you and your business make sure that you are correctly filing your corporation tax refund. Contact us for more information about our services.