Corporation Tax is the tax due on company profits. Once the accounting profit is worked out for a company, it is then turned into the taxable profit by adding back certain expenses that are not tax deductible and taking out certain capital allowances that act as tax reliefs and reduce the company's tax bill. This is a quite a complex process as there are literally thousands or rules regarding what you can and can not claim as tax deductible.
A Limited Company has to register for Corporation Tax with HMRC. You must fill out the appropriate form and file it with you local tax office. The 123 Way includes Corporation Tax registration.
Corporation Tax is currently 20% but will be reducing to 19% from 2017 and 18% from 2020. Many commentators believe these decreases might actually be brought forward by the Chancellor.
A Limited Company must submit a Corporation Tax return each year. This is due 12 months after its company’s year end. So if the first company year end is 31 May 2015 then it will be due before 31 May 2016.
You also have to pay your Corporation Tax. This is due within 9 months and 1 day of the company year end. Using the example above you would need to pay this by 1 March 2016.
Corporation Tax is very important; there are a number of fines and penalties if you make any mistakes.
The 123 Way includes the working out of your company's taxable profit and the preparation and submission of your Corporation Tax Return and all supporting computations.