Company Tax Returns & Corporation Tax

As a limited company, you’re probably already aware that you have a load of responsibilities to uphold when it comes to tax. Add this to the long list of other daily tasks and it’s easy to see how dates and deadlines get muddled or worse, forgotten.  

That’s why we’re here to make sure company tax returns and Corporation Tax don’t end up slipping your mind! This page should help give you the lowdown and leave you feeling fully informed about all things tax return. 

Company Tax Returns

A company tax return, also known as a CT600, is filed by most companies with HMRC each year to report on financial info. This includes things like earnings, losses, loans and any other factors relevant to their tax liability. 

It’s important this initial step is completed because the info on the tax return is what’s used to calculate the corporation tax owed. Using professional advice and services can be helpful here to make sure all paperwork is filled in accurately and efficiently leaving no room for errors and penalties further down the line!

What is Corporation Tax?

Put simply, Corporation Tax is a tax paid by companies on their profits. This includes investment income profits, trading profits and chargeable gains from selling business assets for more than their cost. Corporation tax is known as the main tax limited companies need to pay. The rate of corporation tax can fluctuate so make sure you stay on top of the correct rates for your accounting period. You can find the relevant dates right here 

You’ll probably already know that you need to register for Corporation Tax when you set up as a limited company and within 3 months of starting to trade. We advise you register as soon as possible to make sure you steer clear of any pesky penalties! 

Paying Corporation Tax

It is the responsibility of the company director to pay Corporation Tax on the limited company’s annual profits. As there’s several ways you can go about paying your Corporation Tax to HMRC, we thought we’d list them below so you can see the full range of your options: 

  • Online or telephone banking via CHAPS, Faster Payments or Bacs  
  • Direct debit 
  • Online via a debit or corporate credit card 
  • Direct at your bank or building society 

Just remember, some will take longer than others so you may need to factor this in to make sure you stay in line with deadlines. For example, if you’ve yet to set up a direct debit, the final option could take up to 5 working days and when time is of the essence, that could be 5 days too long. 

Deadlines & Rates

When you pay your Corporation Tax is dependent on your taxable profits. For taxable profits of up to £1.5 million, you’ll need to pay your Corporation Tax nine months and one day after your accounting period ends. Your accounting period is usually the same as your financial year but you may have two accounting periods in the year you set up your company.  

For companies with profits under £50,000, you’ll pay the small profits rate of 19%. For companies with profits over £250,000, the main rate of 25% applies. The 25%, this time reduced by a marginal relief, is also applied to those with profits between £50,000 and £250,000. 

If your taxable profits exceed £1.5 million, it needs to be paid in instalments. You can find out more about this on the government website 

Missing your Corporation Tax deadline is never a good thing, especially when it means you’ll be saddled with interest on your upcoming payments. We suggest paying it early. You never know, you may even be rewarded for your organisation... 

Did you know that if you pay your Corporation Tax early, you earn ‘credit interest’ from HMRC at an annual rate of 0.5%? There’s some incentive if we ever heard any! They’ll pay this interest from whenever you pay your bill, starting no earlier than 6 months and 13 days after your accounting period begins.  

Get in touch

Need more clarification about something you’ve read? We’re here to help! Get in touch with us today so we can advise you on how we can help file your corporation tax returns.