What is corporation tax?
Corporation tax is paid by businesses in the UK and is calculated on their annual profits. The corporation tax rate has been 19% for all limited companies since April 2016. Unlike individuals, companies don’t receive any kind of tax-free allowance, and therefore all profits are taxable. However, there are a number of expenses and deductions that can be claimed to reduce your bill.
You must pay Corporation Tax on profits from doing business as:
- a limited company
- any foreign company with a UK branch or office
- a club, co-operative, or other unincorporated association, eg a community group or sports club
Profits you pay Corporation Tax on
Taxable profits for Corporation Tax include the money your company or association makes from:
- doing business (‘trading profits’)
- investments
- selling assets for more than they cost (‘chargeable gains’)
If your company is based in the UK, it pays Corporation Tax on all its profits from the UK and abroad.
If your company isn’t based in the UK but has an office or branch here, it only pays Corporation Tax on profits from its UK activities.
To pay, you must submit a company tax return (form CT600) to HMRC once a year.
Contact us and we can help you file CT600 for your business.