Corporation tax is a piece of legislation that may be a little tricky to get your head around.
Don't worry though, as daunting as it may sound, at ClearSky Contractor Accounting we're with you all the way; so we've written the following short guide to help you out when it comes to understanding corporation tax.
What is corporation tax?
Corporation Tax is basically a levy on your profits, or a charge on any money left over once all your expenses (including salary) have been deducted from your turnover. For example, if your company has a turnover of £130,000 and you have £40,000 worth of business expenses, you’d pay Corporation Tax on the remaining £90,000.
What is the rate of Corporation Tax?
The current rate set by the government is 20%, but there are plans to reduce it to 19% from 1st April 2017 and 18% from 1st April 2020.
When is Corporation Tax due?
Your payments need to be made within nine months and one day of your company’s year end. So, if your year end is 31st December, your Corporation Tax payment is due on 1st October the following year.
You’ll also need to file a CT600 tax return every year, 12 months after your company’s year end.
HMRC is pretty keen on timekeeping, so if you don’t meet the deadlines and requirements, you may end up receiving a penalty or even an increase in your Corporation Tax bill. In addition, you’ll need to keep accurate and detailed financial records for at least the past six financial years.
Find out more about accountancy deadlines on our accounting deadlines guide.
Need more help with corporation tax?
At ClearSky Contractor Accounting, we realise that you might not have enough time in your busy WorkStyle to get your head around the various tax laws. That’s why we’ll be with you all the way and help you remain whiter than white at all times.