Corporation Tax

Our Corporation Tax service runs alongside our preparation of Year End Accounts service

We are based in Preston, Lanacashire, and provide Accounting and Tax Services to England and Wales.

Corporation Tax calculations involve taking the profits from the Statutory Accounts and making some adjustments required by HMRC.

What is Corporation Tax ?

Corporation Tax is a tax on the profits of Limited Companies and other organisations including clubs & societies.

Taxable profits for Corporation Tax include profits from taxable income such as trading profits and capital gains.

If your company or organisation is based in the UK, you will pay Corporation Tax on all your taxable profits - wherever in the world those profits come from.

Generally speaking, a company's Corporation Tax year is the same as its Accounting Year. If the company's year end is 31st December, the Annual Accounts and Corporation Tax calculations will be for the year to 31st December.

Company Tax Year

The Corporation Tax year end is usually the same as the company's accounting year for the company's Statutory Accounts, which normally starts when the company is formed.

A Corporation Tax year cannot be more than 12 months. Therefore if the company (rarely) extends its year, say to 15 months, then two sets of Corporation Tax calculations need to be done, one for 12 months, and one for 3 months.

For clarification, Corporation Tax is not taxed on the 6th April to 5th April rules like Income Tax.

If you are trading through a Limited Company you will always need to be mindful of the two separate tax years, ie. Corporation Tax and Income Tax not being lined up together on the same dates.

Company Tax Return

A Limited Company must file a Company Tax Return online with HMRC

The Company Tax Return includes:
• Form CT600
• Corporation Tax Calculations (also known as Computations)
• Statutory Accounts

The total Corporation Tax to be paid will be calculated from various figures, including:
• Profit in the Accounts
• Capital Allowances claimed for Fixed Assets
• Any unused losses
• Directors’ loans not repaid at the end of the financial year
• Expenses which are not allowed as deductions for tax

Corporation Tax Rates

Corporation Tax Rates are set by the UK government for the fiscal year from April to March. Therefore if a rate changes, you may find that your Accounts year has to be split between different rates.

How To Pay Corporation Tax

This is a link to the GOV.UK webpage:
Pay your Corporation Tax

You will need the company's payment reference number - please see below.

Corporation Tax - Payment Reference Number

The company's Corporation Tax payment reference number is made up of 17 characters and will look like this example:   0123456789A00105A

The 17 characters are:

• The company's Unique Tax Reference (UTR) - 10 numbers
• Then A001 (the same for every company)
• The 2 digit Accounting Period
• Then the letter A (the same for every company)

The Accounting Period is where the uncertainty is, it generally depends on how old the company is (eg. 01 for the first year). It has nothing to do with the calendar month or year, or the company's year end date.

The Accounting Period for the payment reference number is set by HMRC and may not be a straight sequence from the company's formation, especially if there is a change in the company's Accounting Reference Date

The payment reference number will appear on a Corporation Tax payment notice, and on HMRC Online if you have access. Otherwise, your accountant should be able to inform you.

Corporation Tax Links

GOV.UK Introduction to Corporation Tax