Corporation tax and rates

What is corporation tax?

This is the tax that Ltd companies pay on their taxable profits. Taxable profits are made up of profits from trading and most investments, along with any ‘chargeable gains’ made by the company. Chargeable gains being the term used when a company makes capital gains.

Your company’s taxable profit is, broadly speaking, the company income less company expenses; with VAT removed from the calculation.

For companies based in the UK, corporation tax is applied to all taxable profits, no matter where in the world the profit was made.

What are the corporation tax rates?

There are currently two rates. For smaller companies with a profit of £50,000 or less the ‘small profits rate’ of 19% is applied. For companies with a profit of £250,000 or more the main rate of corporation tax of 25% is applied.

Between 1 April 2015 and 31st March 2023 there was a single rate, steady at 19% since 1st April 2017.

What does a company need to do?

A company has several obligations with regards to corporation tax and the main points are as follows:

• A company must tell HMRC within 3 months of starting to trade that it is liable to corporation tax.
• The tax must be paid by nine months and a day following the end of the company’s corporation tax period.
• A tax return must be submitted by 12 months after the end of the company’s corporation tax period.
• Helping you to meet your company’s corporation tax obligations is part of Integro Accounting’s fixed fee service.