How to Pay Corporation Tax

If you’re a business owner you’re going to have to pay corporation tax at the end of your financial year to the government. That’s why Prestige Tax and Trust Services has decided to explain how to pay corporation tax.

Corporation tax

The corporation is a levy that the government places on the taxable profits of businesses in the UK, and foreign firms with a UK-based office or branch. The law requires you to keep a record of your corporation tax payments.

The government classes “taxable profits” as the revenue your firm generates on investments, doing business (trading profits) and the sale of assets for more than they cost (chargeable gains). If your company is UK-based, it has to pay corporation tax an all profits, however if it only has a UK office or branch, then it only has to pay corporation tax on its UK activities.

Paying corporation tax

It’s your job to determine how much your firm owes in corporation tax. However if you’re a limited company, you first need to set up for corporation tax and this must be done within three months of the beginning of your firm’s accounting period, or you may receive a penalty. Then you will need to pay and report corporation tax. This is the process you need to follow:

  • Click here to find out your business’ deadlines for paying and filing your company tax returns. These will depend on your firm’s financial year.
  • Refer to the government’s corporation tax rates and reliefs page. This will give you the information you need to deduct relief from your taxable profit. Then you need to multiply the remaining taxable profit by your rate, to determine how much corporation tax you need to pay.
  • Pay corporation tax to HM Revenue and Customs by the end of your financial year. There are several ways to do this. If you’re paying on the same or next day you can pay through CHAPS or online/telephone banking.
  • However, if you’re paying within three working days, you can pay by online debit or credit card, direct debit, Bacs or at your post office, bank or building society. Alternatively, if you’re paying within five working days you can pay through direct debit if you haven’t previously set one up.
  • File your company tax return. This will allow you to report your corporation tax to the government.

Prestige Tax and Trust Services

There are a lot of steps you need to take to ensure you pay corporation tax, and it can be a confusing process. If you need help with issues relating to corporation tax, come to Prestige Tax and Trust Service; the team at our business protection service have the skillset and experience you need to ensure your firm conforms to the legal requirements of corporation tax.

This entry was posted in Prestige Tax and Trust Services and tagged , , , , , . Bookmark the permalink.