Corporation tax is a tax payable on limited liability corporations and other groups’ taxable income, including societies, clubs, unions, and unincorporated entities.

A corporate tax is levied on a company’s or organization’s taxable income. Profits from taxable income (such as investment or trading profits) and capital gains are also taxable (also known as chargeable gains).

Who is liable for paying this tax?

Companies and entities operating in the United Kingdom are expected to pay income tax on all taxable profits, regardless of where the profits originate (in the world).

If a company does business in the UK but isn’t headquartered there (via branch or an office), corporation tax is only payable on taxable income generated in the UK.

Corporation Tax Registration

One of the first things you can do when creating a limited company is registering with HMRC for Corporation Tax. On the government official website, you will do so. Within three months of beginning to trade, you must register, which includes:

  • Purchasing,
  • Selling and advertising a property;
  • Renting a property; and
  • Hiring someone

An individual might face a penalty if he/she registers late, so make sure it’s at the top of their to-do list when they first start their company.

What is taxed, and how do I pay corporation tax?

A business must file for corporation tax as part of becoming a private limited company during three months of starting to trade to make sure the necessary tax is paid (make sales and receive payments).

The corporation is responsible for keeping correct accounting records utilized to file its annual tax return.

Corporation tax is imposed on all income generated by a corporation. This involves trading gains obtained from standard business activities such as sales, acquisitions, and proceeds from asset sales (chargeable gains).

When does this tax is charged?

Corporation tax is a charge imposed on all related companies at the end of each financial year for income received during the business’s accounting periods.

Corporation tax needs to be collected by a certain deadline. This is typically nine months and one day after the end of your accounting period. The tax return must be filed within 12 months of the accounting period’s end.

Various Corporation Tax Reliefs

  • Research & Development (R&D) relief
  • Creative industry tax reliefs (television, radio, film)
  • Marginal Relief
  • goodwill and relevant assets Relief
  • Disincorporation Relief