What is corporation tax in the UK?

A company director should be aware of filing a company tax return and calculating profits earned for business purposes as well as meet the payment deadline to the HMRC. Getting professional advice is the way to go for your accounting year as a UK limited company. Here are a few more details for a simpler understanding of the increasingly complex process of the UK taxation system.

Pay Corporation Tax on deadlines

At dns accountants, we can calculate your taxable profit and give you an estimate of your corporation tax bill for this accounting period. Your accounting period determines a lot while you're paying tax to the HMRC. Any limited company should use the right tax rates before the end of the accounting period to pay their taxes.

This has more benefits than you can think of! For example, there is a possibility to reduce your corporation tax liability by ensuring corporation tax payment before the deadline. If you need to pay corporation tax right away, get in touch with experts at dns accountants. They will be more than happy to give you a free consultation to determine your capital gains and your capital expenditure as well! This can help them look for ideas for your tax relief.

Corporation Tax bill explained

But why is there so much stress on you to pay tax on companies taxable profits before the corporation tax deadlines? You can gain the interest of 0.5% when you pay this tax before the end of the company's accounting period. This can sound like a small cash payment by the HMRC, but can be the tax refund or the tax relief that you have been looking for!

This can also be used when you need to pay any other business expense or pay the HMRC for any other tax that you owe. How much corporation tax you pay depends on the tax rate while you're filing your company tax return.

Corporation tax rate 2021

The tax rate is 19% for any corporation tax return made by a company or small business in the UK. Corporation tax depends on the profit that a company makes. This depends on any profit from sales of asset investments or the sale of anything other than their own products or services. All foreign companies need to pay Corporation Tax to the HMRC. This is only paid on the profits that companies have made in the UK. Please note that sole traders needn't give any corporate tax whereas limited companies don't pay income tax and National Insurance contributions.

Calculating taxable profits

Your tax bill constituents are not mysterious. You can easily calculate them before your company pays corporation tax. Trading profits is a term coined to use when you have deducted allowable expenses from the profits you get from your self-employment tax or partnership tax.

To calculate your company's taxable profits, you can either use traditional accounting or cash basis accounting. These are enlisted on the Government's website for reference. The process consists of understanding your expenses and income with respect to the particular accounting method.

Companies House & corporate tax

To file your corporation tax, you will have to update all your accounts with Companies House as well. Companies House is the authority for all companies in the UK. Filing corporation tax means you have to go online to the website and convert your accounts to the required format.

Financial services for the end of your accounting period

To understand how to calculate corporation tax from your company profits and to ensure your future profits from a tax refund, get in touch with dns accountants today. They will not only help you figure out the minute details about your tax-deductible expenses but also about tax treaties.

Most UK resident companies don't have much of an idea about how much profit they can make out of simply filing their company tax returns early on in their accounting period.

How were your books of accounts maintained in the previous financial year? If you had trouble assessing the company's profits for the calculation of your company's annual profits, there will be trouble in pre-calculating how much tax to pay. UK limited companies often make the mistake of dealing with such crucial company's accounts and the filing deadline lightly.

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