Optimise Your Corporation Tax with Optimise Accountants Are you tired of navigating the complicated waters of corporation tax? Unsure if you’re getting the best corporation tax rates for your business? Look no further. At Optimise Accountants, we are the experts you’ve been searching for. Our team advises businesses on reducing corporation tax efficiently while staying compliant. Feel free to use our free online UK corporation tax calculators for your limited company. UK Corporation Tax Rates Main Rate: As of 2021, the UK’s main rate of corporation tax was set at 19%. It was planned that starting from April 2023, the rate would increase to 25% for businesses with profits over £250,000. Small Profits Rate: Starting from April 2023, companies with profits of £50,000 or less would pay a reduced rate, known as the Small Profits Rate, set at 19%. The effective tax rate would gradually increase for profits above £50,000, reaching the full primary speed at £250,000. Allowances and Reliefs: Capital Allowances: Businesses can offset the cost of certain capital assets against their taxable profits. This includes allowances for machinery, business vehicles, and research and development. Research and Development (R&D) Tax Credits: Companies involved in R&D can claim additional tax relief on their qualifying costs. SMEs can claim a deduction of 130%, in addition to the standard 100% deduction, for a total 230% deduction. Alternatively, a company incurring a loss could claim a tax credit. Creative Industry Tax Reliefs: For companies involved in film, high-end television, animation, children’s television, video games, theatre, orchestra, and museums, there are specific tax reliefs available. Patent Box: Companies earning profits from patented inventions can apply for the Patent Box regime, effectively reducing the corporation tax rate on relevant profits to 10%. Marginal Relief: While planned to be phased out with the introduction of the distinct rates in 2023, Marginal Relief could provide relief for companies with profits just over the £50,000 or £250,000 thresholds. Associated company rules An associated company, in the context of UK corporation tax, is a company that has a specific relationship with another, typically defined by control. Control in this context often means the power to ensure that the company operates per one’s wishes. This can be due to shared ownership, voting rights, or any other powers outlined in the company’s articles of association. Control Test: The fundamental test is whether one company controls another or if both are under the control of the same person or persons. Majority Rights: If a person possesses, or is entitled to acquire, anything which would, if they were to become entitled to them, make them control the company, that person is deemed to control the company. Attribution Rules: Rights or powers of a person’s associates (e.g., family members or trustees of a settlement in which the person or his relatives are involved) can be attributed to that person. Shareholding Control: Company A holds 55% of the shares in Company B. As Company A has a majority shareholding in Company B, they are associated companies due to direct control. Family Attribution: John owns 40% of Company C, and his sister, Jane, owns another 40%. Individually, neither has control. However, under the family attribution rules, John is considered to control the company because he and a family member combined have the majority of shares. Thus, any other company John controls would be an associated company of Company C. Indirect Control through Voting Rights: Emily owns only 30% of the shares in Company D but has 60% of the voting rights due to the specific rights attached to her class of shares. Because she controls the company through voting rights, any other company she controls would be an associated company of Company D. How We Help You There are legitimate ways to reduce corporation tax without breaching any laws. Here’s a sneak peek into how we can assist you: Maximizing Deductions: By ensuring all allowable expenses are claimed. Asset Management: Advising when to purchase or sell assets for tax benefits. Profit Management: Timing profit declarations appropriately to benefit from varying tax rates. Filing Limited Company Accounts with Companies House: Every limited company in the UK must file annual accounts with Companies House. These accounts provide a snapshot of the financial health of the company. First Accounts: If you’re filing your company’s first accounts, they must be submitted to Companies House within 21 months of registering with Companies House. Subsequent Accounts: Your accounts must be filed with Companies House within 9 months of the company’s financial year-end for the following years. Penalties: There are penalties for late filing, which increase the longer the accounts are overdue. Filing and Paying Corporation Tax to HMRC: Separate from the annual accounts, limited companies also need to calculate and pay corporation tax on their profits. This requires the submission of a Corporation Tax Return, known as a CT600. Payment: The corporation tax payment is typically due 9 months and one day after your company’s accounting period ends. This is usually the financial year covered by your annual accounts. Filing CT600: The Corporation Tax Return (CT600) must also be filed within 12 months of your company’s year-end. Points to Note: It’s essential to ensure you’ve made the necessary arrangements to pay your corporation tax on time, even if you haven’t yet filed your CT600. HMRC doesn’t send reminders about corporation tax, so the company must remember the due dates. Penalties: Like Companies House, there are penalties for late filing and payment with HMRC. The penalties can increase significantly the longer the CT600 or payment is overdue. In both cases, keeping accurate and timely records throughout the year is crucial to ensure compliance. Given the complexities and potential penalties, many companies consult with accountants or tax advisors to ensure they meet their obligations correctly. CT600: The main form you’ll need when declaring your corporation tax. FAQ How often do corporation tax rates change? Tax rates can change annually, depending on government budgets. We stay updated, so you don’t have to. How can I be sure I'm not missing any tax deductions? Our thorough review ensures every allowable deduction is claimed on your behalf. What if my business structure changes during the year? We offer adaptive solutions, so you always get the best advice irrespective of structural shifts. Are there penalties for late corporation tax payments? Yes, the HMRC imposes fines for late payments. We’ll ensure you’re always on time. Can Optimise Accountants assist with tax planning for future years? Absolutely! We believe in proactive approaches and can craft forward-looking tax strategies for you.
Optimise Your Corporation Tax with Optimise Accountants Are you tired of navigating the complicated waters of corporation tax? Unsure if you’re getting the best corporation tax rates for your business? Look no further. At Optimise Accountants, we are the experts you’ve been searching for. Our team advises businesses on reducing corporation tax efficiently while staying compliant. Feel free to use our free online UK corporation tax calculators for your limited company. UK Corporation Tax Rates Main Rate: As of 2021, the UK’s main rate of corporation tax was set at 19%. It was planned that starting from April 2023, the rate would increase to 25% for businesses with profits over £250,000. Small Profits Rate: Starting from April 2023, companies with profits of £50,000 or less would pay a reduced rate, known as the Small Profits Rate, set at 19%. The effective tax rate would gradually increase for profits above £50,000, reaching the full primary speed at £250,000. Allowances and Reliefs: Capital Allowances: Businesses can offset the cost of certain capital assets against their taxable profits. This includes allowances for machinery, business vehicles, and research and development. Research and Development (R&D) Tax Credits: Companies involved in R&D can claim additional tax relief on their qualifying costs. SMEs can claim a deduction of 130%, in addition to the standard 100% deduction, for a total 230% deduction. Alternatively, a company incurring a loss could claim a tax credit. Creative Industry Tax Reliefs: For companies involved in film, high-end television, animation, children’s television, video games, theatre, orchestra, and museums, there are specific tax reliefs available. Patent Box: Companies earning profits from patented inventions can apply for the Patent Box regime, effectively reducing the corporation tax rate on relevant profits to 10%. Marginal Relief: While planned to be phased out with the introduction of the distinct rates in 2023, Marginal Relief could provide relief for companies with profits just over the £50,000 or £250,000 thresholds. Associated company rules An associated company, in the context of UK corporation tax, is a company that has a specific relationship with another, typically defined by control. Control in this context often means the power to ensure that the company operates per one’s wishes. This can be due to shared ownership, voting rights, or any other powers outlined in the company’s articles of association. Control Test: The fundamental test is whether one company controls another or if both are under the control of the same person or persons. Majority Rights: If a person possesses, or is entitled to acquire, anything which would, if they were to become entitled to them, make them control the company, that person is deemed to control the company. Attribution Rules: Rights or powers of a person’s associates (e.g., family members or trustees of a settlement in which the person or his relatives are involved) can be attributed to that person. Shareholding Control: Company A holds 55% of the shares in Company B. As Company A has a majority shareholding in Company B, they are associated companies due to direct control. Family Attribution: John owns 40% of Company C, and his sister, Jane, owns another 40%. Individually, neither has control. However, under the family attribution rules, John is considered to control the company because he and a family member combined have the majority of shares. Thus, any other company John controls would be an associated company of Company C. Indirect Control through Voting Rights: Emily owns only 30% of the shares in Company D but has 60% of the voting rights due to the specific rights attached to her class of shares. Because she controls the company through voting rights, any other company she controls would be an associated company of Company D. How We Help You There are legitimate ways to reduce corporation tax without breaching any laws. Here’s a sneak peek into how we can assist you: Maximizing Deductions: By ensuring all allowable expenses are claimed. Asset Management: Advising when to purchase or sell assets for tax benefits. Profit Management: Timing profit declarations appropriately to benefit from varying tax rates. Filing Limited Company Accounts with Companies House: Every limited company in the UK must file annual accounts with Companies House. These accounts provide a snapshot of the financial health of the company. First Accounts: If you’re filing your company’s first accounts, they must be submitted to Companies House within 21 months of registering with Companies House. Subsequent Accounts: Your accounts must be filed with Companies House within 9 months of the company’s financial year-end for the following years. Penalties: There are penalties for late filing, which increase the longer the accounts are overdue. Filing and Paying Corporation Tax to HMRC: Separate from the annual accounts, limited companies also need to calculate and pay corporation tax on their profits. This requires the submission of a Corporation Tax Return, known as a CT600. Payment: The corporation tax payment is typically due 9 months and one day after your company’s accounting period ends. This is usually the financial year covered by your annual accounts. Filing CT600: The Corporation Tax Return (CT600) must also be filed within 12 months of your company’s year-end. Points to Note: It’s essential to ensure you’ve made the necessary arrangements to pay your corporation tax on time, even if you haven’t yet filed your CT600. HMRC doesn’t send reminders about corporation tax, so the company must remember the due dates. Penalties: Like Companies House, there are penalties for late filing and payment with HMRC. The penalties can increase significantly the longer the CT600 or payment is overdue. In both cases, keeping accurate and timely records throughout the year is crucial to ensure compliance. Given the complexities and potential penalties, many companies consult with accountants or tax advisors to ensure they meet their obligations correctly. CT600: The main form you’ll need when declaring your corporation tax.
