Incorporated and unincorporated businesses such as Associations, Societies, Clubs and Charities are subject to Corporation Tax.
On Which Profits Does Corporation Tax Apply?
Even if trading profits or investment profits your company has made were from overseas sales then Corporation Tax still applies. This does not apply to dividend income though as they are taxed differently.
Payment of Corporation Tax
You must pay your Corporation Tax within certain time scales and payment must be made within 9 months after your Corporation Tax Accounting year ends. A Corporation Tax Accounting year would normally run for 12 months and this can never be longer, but in certain situations can be shorter. Filing of your tax return can be done up to 12 months after your Corporation Tax year ends and this means you need to complete a Corporation Tax Return and also submit any supporting documents.
If your company profits exceed 1.5 million then payment of your Corporation Tax must be done in instalments, the last being paid at the latest 9 months after the end of your Corporation Tax year.
To calculate Corporation Tax:-
* Use The Pre Tax Profit Figure
* Add Depreciation Charges
* Less Capital Allowances
* Add Other relevant Income or Chargeable Gains
* Less Other relevant deductions, reliefs, allowances or losses
Apply the relevant tax rate which calculates your Corporation Tax Payable
Less any relevant Tax Credit and any Income Tax already deducted from your company (eg: Tax deducted by the Bank before interest paid )
Less any Corporation Tax you have already paid for (you may have made an early payment) and this equals how much you need to pay or how much you need to claim back if you have overpaid.
Make sure that you are using the correct calculations and not just using your Company Accounts and one rate as your Company Accounts Year may reflect different rate periods, you can always check this with your accountant.
If your Companies Corporation Tax Year does not reflect the Corporation Tax Financial year, which is 1st April to 31st March, then you will have to be careful to calculate your Corporation Tax proportionately in line with the rates set by the Chancellor of the Exchequer. You will in effect be using rates from two Corporation Tax Financial Years and although this doesn't mean that you cannot use your own Companies Financial Year, you do need to take care to ensure that the Calculations and Rates you use are correct for use of Corporation Tax Calculations.
If you do not feel that you are able to calculate your Corporation Tax, you can always appoint someone, such as an accountant to deal on your behalf.