The word ‘corporation’ draws up images of large multi-nationals trampling around the globe on a mission to make everything look, feel and taste exactly the same.
However, Corporation Tax is a tax which applies to anyone running their own limited company. The question is: what exactly is corporation tax and how exactly does it work? Let’s break it down…
Corporation Tax is essentially a tax which is placed on the profits from your business. As with all taxes, the more you make the more you pay. This is usually done on an annual basis.
Here’s what you pay:
- If your company makes less than £300,000 profit over the year you pay the Small Profits Rate of 21% (due to go down to 20% in 2011).
- If your company makes more than £300,000 profit over the year, but less than £1.5 million, you pay a Marginal Relief rate which gradually tapers upward. That is until you go beyond…
- That magical £1.5 million annual profit which then means you have to pay the Standard Rate of 28% (due to fall to 27% in 2011).
HMRC are now very keen for everything to be sent electronically, as their website states:
“From 1 April 2011, companies and organisations will have to submit their Company Tax returns online and pay all Corporation Tax and related payments electronically. Related payments include interest charges on overdue Corporation Tax and penalties for not filing Company Tax Returns on time.”
If your companies profits are less than £1.5m then you must pay the Corporation Tax nine months after the accounting period. So, if your company’s accounting period ends on 31 May you must file your Corporation Tax before March 1 the following year.
For those earning more than £1.5m you must normally pay Corporation Tax for that period in instalments.
Naturally, as Crunch is an online accounting service we perform Corporation Tax returns as standard for our customers (no pesky extra charges!). Quite simply, we help ensure our customers never miss a deadline!