Whether you are starting up a company or already have a business, you will need to know about UK corporation tax payment deadline. This is because there are financial penalties for failing to pay corporation tax by the due date.
What is corporation tax?
Among the many taxes imposed on businesses and individuals, corporation tax is one of the most important. This is because it generates a lot of money for the government.
Corporation tax is paid by UK companies as well as foreign companies with a permanent UK office. The tax is calculated on profits of all types of companies, from small businesses to large corporations.
Registering for corporation tax
Those registering for corporation tax in the UK need to know the key elements of the process. It used to be the case that Limited liability companies registered for UK corporation tax by completing form CT61G and submitting same to HM Revenue and Customs.
This is no longer how it is done. Nowadays, HMRC is automatically notified by Companies House as soon as a company is incorporated. On receiving this information, HMRC automatically registers the new company for corporation tax and writes to the directors to provide them with the company’s unique tax reference.
The accounting period
The accounting period is essential in trying to establish when the corporation tax of a company is due. This is because the date on which the accounting period ends will determine when the corporation tax liability is due for payment.
The first thing to know is the date when the company is formed. This will determine the accounting period. The accounting period is the time period that is covered by the Company Tax Return. It must be at least twelve months long, but it can be longer or shorter depending on the circumstances behind the variation.
If the accounting period is less than 12 Months, then the accounting period for corporation tax purposes is the accounting period. If the accounting period is longer than 12 month then the accounting period for corporation tax purposes will to be split into a 12 month accounting period and a smaller period ending on the accounting period end date.
When is corporation tax due?
Depending on the type of business and the size of the company, there are different deadlines for UK corporation tax payment. For a small company, the Corporation tax payment deadline is nine months after the end of its accounting period. A larger company needs to make four instalment payments. A large company in this case refers to a company with annual profits of more than £1.5 Million.
Who is responsible for paying a company’s corporation tax?
Whether a corporation owes taxes or not, it’s important to know who is responsible for paying the bills. In the UK, the ultimate responsibility for paying a company’s corporation tax lies with its directors.
A corporation pays taxes on the profits it generates. These profits include money the company makes on investments as well as the profits from its main trading activities. Profits here refers to its net profit after all expenses have been deducted. These expenses include salaries, operating expenses, product and advertising outlays, and the cost of retirement plans.
How to pay corporation tax
Whether you are a small Limited Company or a large corporation, you need to understand how to pay UK corporation tax.
There are a number of ways to pay Corporation Tax, including online, through the post or by the telephone. You can also pay with Faster Payments. The payment usually reaches HMRC the next working day.
It is recommended that you pay by the end of the day before the deadline, as this ensures that the payment is deposited into HMRC bank account by the Corporation tax payment deadline. You will need to quote the company’s accounts reference number when you make your payment.
Failure to meet the corporation tax payment deadline
For small Limited companies there are no penalties for failing to pay corporation tax by the due date. However, interest will be charged by HMRC on the amount of corporation tax paid late. The interest is calculated from the first day after the corporation tax is due until the date that it is paid.
Where a company’s annual profit exceeds £1.5 million the company will be required to pay that corporation tax by instalments. If the company deliberately failed to make payments on account properly, HMRC may charge penalty.