Company Tax

Company tax in the UK, also known as corporation tax, is a tax that limited companies and some other organizations pay on their profits. Profits can come from doing business (trading profits), investments, or selling assets like property or shares for more than they cost (capital gains). In simple terms, if a company makes money after paying its expenses, it must pay a part of that profit to the government as corporation tax.

The current corporation tax rate in the UK is 25% for profits over £250,000 and 19% for profits under £50,000, with a gradual rate for profits in between. This means if your company earns £100,000 in profit, you will pay a percentage of that to HMRC (the UK’s tax authority).

Companies must file a Corporation Tax Return (form CT600) every year to report their profits and how much corporation tax they owe. If a company doesn’t pay on time, HMRC can charge penalties and interest. That’s why many businesses use a company tax advisor like TaaX to ensure everything is calculated correctly, submitted on time, and that they don’t pay more tax than they should.

In the UK, corporation tax must be paid by any limited company that makes a profit. It doesn’t matter if the company is large or small—if it’s registered with Companies House and has profits, it must pay this tax. Other organizations, like clubs, societies, and associations, may also need to pay corporation tax if they make a profit.

If you start a limited company, you are responsible for telling HMRC when your company becomes active (starts trading or earning income). Even if your company does not make a profit or you don’t owe any tax, you still need to file a Company Tax Return each year.

Partnerships and sole traders do not pay corporation tax; they pay income tax instead. If your company is a property company that earns rental income or a trading company selling products, you will still need to pay corporation tax on the profits.

TaaX’s company tax advisor can help you understand if your company needs to pay corporation tax and guide you through the filing process. We’ll make sure you don’t miss deadlines and pay only what’s required.

Filing a Company Tax Return in the UK is a key step for any limited company. This return tells HMRC how much profit your company made and how much corporation tax it needs to pay. The process can seem confusing, but it becomes easier when you break it down.

First, you need to prepare your company’s annual accounts, showing income, expenses, and profits. These accounts will be used to complete the CT600 form, which is the official Company Tax Return form. The return must be submitted online to HMRC within 12 months of the end of your company’s accounting period, but any corporation tax due must be paid within 9 months and 1 day after the accounting period ends.

Filing incorrectly or missing deadlines can result in penalties, so many companies hire a company accountant or use TaaX’s company tax services. We take care of everything, from preparing your accounts to submitting the CT600 form. We make sure everything is done correctly and on time. Our team explains complex terms clearly and guides you step by step, making the process easy and stress-free.

Allowable business expenses are costs that are essential for running your business. The UK government allows companies to subtract these expenses from their profits before calculating how much tax they owe. This means you only pay tax on the remaining profit.

Common allowable expenses include employee salaries, office rent, utility bills, travel costs for business trips, marketing expenses, and professional fees like those paid to a company tax advisor. If you use equipment like computers, machinery, or vehicles for business purposes, you can also claim capital allowances on these items.

Training costs, subscriptions to professional organizations, and even some entertainment costs related to business deals can sometimes be claimed. However, personal expenses and non-business-related costs cannot be deducted.

At TaaX, our company accountant ensures you claim all the deductions you’re entitled to so you don’t pay more tax than you should. We explain which expenses are allowed and help you keep proper records, ensuring everything is compliant with HMRC rules.

If your company doesn’t file its Company Tax Return on time, HMRC will issue penalties. These penalties apply even if your company has no tax to pay. The fines start at £100 for missing the filing deadline by up to three months. If you miss the deadline by more than three months, the fine doubles to £200.

If the return is more than six months late, HMRC will estimate your company’s tax bill and add a 10% penalty on top of the unpaid tax. After 12 months, another 10% penalty applies. If your company repeatedly misses deadlines, the penalties increase further.

Additionally, interest will be charged on any late corporation tax payments, making it even more expensive. This can cause unnecessary financial strain on your business.

To avoid these issues, many companies work with a company tax advisor like TaaX. Our experts manage your tax deadlines, prepare accurate returns, and ensure timely submissions. With our support, you won’t have to worry about penalties, and you can focus on growing your business.