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Limited Company Corporation Tax

What is Corporation Tax?

Corporation Tax is a tax on your companys profits, calculated each year. If you do it yourself and get it wrong, you could be subject to a significant fine from HMRC. Contractors Limited Company provides a specialist contractor accountant service, ensuring you are compliant.

You are obliged to tell HMRC when you set up your own Limited Company. Your Limited Company is liable for tax, payable to HMRC. During the setup process, you can authorise your accountant to act on your behalf.

To Do

Each year HMRC will require you to file a company tax return. Regardless of who does the calculations you, as Director of the Limited Company, are responsible for the correct submission. That's why it is so important to choose a reliable and friendly contractor accountant.

Your Limited Company Corporation Tax return is known as CT600. All Corporation Tax returns must be filled in online.

12 Months

Your Limited Company is assessed over set accounting periods. Usually this period covers one calendar year and it's when your accounts are drawn up.

Your business is self-assessed over accounting periods. For most businesses these are 12 months long and match the dates you have your accounts drawn up. You can set your accounting period for less than 12 months but not more.

Nine Months Requirements

If your Limited Company is liable for Corporation Tax, it has to be paid nine months and a day after the last day of the Limited Company's accounting period.

Each Limited Company tax return has to contain the Limited Company name, registration number, the registered office and tax reference number.

There are two rates of corporation tax for your limited depending on the level of profits made. The limited company pays 20% on profits of up to £300,000 (The 'small profits' rate). 26% is payable on limited company profits above £1.5 million.

Make a Record

Limited Company records need to be kept for a minimum of six years. This means all receipts and invoices, as well as a record of all sales and purchases made. You can keep electronic records on your computer.

Keep a Date

You must send your Limited Company tax return in by the statutory filing date. This is usually one year after the end of the Limited Company accounting period, or three months after a notice from HMRC to deliver a Limited Company tax return, whichever is the later.

There will be a penalty imposed on your Limited Company by HMRC if the tax return is late or incorrect. Limited Company CorporationTax is due nine months and one day after you're accounting period due date. (This is the last day of your accounting period).

For example, if your Limited Company accounting period end-date is 31st December 2022, your tax will be due to be paid on 1st September 2023.