Corporation Tax Provision Calculator

Jordan Macey

April 20, 2021

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Corporation Tax Calculator

Corporation tax basics: What you need to know

Corporation Tax refers to tax you pay on money your company or association makes from trading profits, investments and chargeable gains.

It is calculated and paid on an annual basis, based on your ‘accounting period' for corporation tax. This is typically the same as your company's financial year. Limited companies, foreign companies with a UK branch or office, clubs, co-operatives and unincorporated associations are required to pay corporation tax on profits.

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When is corporation tax due?

Keep in mind that unlike most taxes, the deadline for paying your corporation tax bill is earlier than the deadline for your tax return.

Your corporation tax bill is nine months and one day following the end of your accounting period. If the end of your accounting period falls on 31 March 2019, you'll need to make your payment by 1 January 2020. The payment is made once a year if your profits fall below £1.5 million. Payment is made in instalments for businesses with profits exceeding £1.5 million.


What is the current corporation tax rate?

The current rate is 19% for the 2019/20 tax year. For the tax year starting 1 April 2020, the rate will be reduced to 18%.

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Corporation Tax Provision Calculator

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What is Capital Gains tax & what are the rates?

Every business owner, or any individual who sells a capital asset should be aware that a Capital Gains Tax (CGT) may apply. Therefore, it's important that you have a basic understanding of the rules surrounding CGT-and we'll explain more about the essentials in our article below.

Capital Gains Tax (CGT) is a tax paid on profits made when you sell or dispose of an asset. As its name suggests, it's the gain you make that is taxed-and not the amount you receive for the asset.

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Company car tax: The basics explained (and recent changes you need to know)

The tax implications of providing a company car can be complex-and made even more confusing by HMRC's tax changes.

To help you along, we've put together an article that will guide you through the essentials.

We'll start with the basics, explaining who pays for company car tax and how it is calculated, before we run you through a quick summary of tax rates changes that were announced in July 2019.

Our article will likely answer the key questions that you have surrounding company car tax, but bear in mind that it isn't a substitute for professional advice. If you have further questions about tax and how it affects your business, do reach out our accountants at Forma for personalised advice.

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How to reduce your Corporation Tax bill

As a small business owner, staying on top of your finances can seem overwhelming, particularly when you're just starting out.

One of the key areas you need to keep an eye on is your taxes, and that's tricky subject to navigate. You want to reduce your tax bill wherever possible-and be in the good books of HMRC while doing so.

Below, we'll share a few simple tactics you can implement to reduce your Corporation Tax. Keep in mind that these are tactics that apply to businesses in general, and depending on your situation or industry, there could be other tax reliefs that may apply.

And as your business grows, there may be allowances or deductions that you now qualify for, but missed out on applying for previously. As such, we highly recommend checking in with our accountants at Forma to clarify any tax issues you're unsure about.

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How do I find a my tax status?

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How do I know how much tax to put aside?

When it comes to setting aside money to pay your tax bill, the general rule of thumb percentage for self-employed individuals is 25% - 30%.

This figure will vary depending on the amount of profit you report. If your profit falls between £50,000 - £100,000, it is recommended that you set aside 40% for tax. And if your profit exceed £100,000, you should be setting aside 45% for tax.

Bear in mind that these are general recommendations, and may not be an accurate estimation depending on your circumstances. HMRC's ready reckoner tool can help you work out an approximate figure you need to set away each month. We recommend consulting our Forma accountants if you need further tax advice.

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How do I pay Corporation Tax?

There are various ways you can make your corporation tax payment:

  • Same day or next day payments: CHAPS, online or telephone banking (Faster Payments)
  • Three working days: BACS bank transfers, Direct Debit, debit or credit card payment online, payment at a bank or building society
  • Five working days: Direct Debit (if you haven't set up a Direct Debit previously)
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How do I pay Scottish income tax?

When you fill in your Self Assessment tax return online, you can check the tick box to inform HMRC that you pay Scottish income tax.

If you're employed or get a pension, your tax code will start with an ‘S'. This is an indication for your employer or pension provider to deduct tax at the Scottish rate.

See HMRC's resource for more information on Scottish income tax.

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How do I receive a tax incentive benefit?

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How do I receive tax free childcare?

To get tax-free childcare, you need to:

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How do I receive trading and property income allowance?

"According to HMRC, you can claim trading allowance if you have trading income from:

  • Self-employment
  • Casual services
  • Hiring personal equipment

You can claim the property allowance if you have income from land or property.

You won't be able to claim the allowances if you have trade or property income from:

- A business that you or an individual connected to you owns or controls
- A partnership where you or individuals connected to you are partners
- Your employer, or your spouse's or civil partner's employer

You can't claim the property allowance if claim:

- Claim the tax reducer for finance costs such as mortgage interest for a residential property
- Deduct expenses from income from letting a room in your own home, instead of using the Rent a Room Scheme"

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How do I reduce corporation tax?

You can reduce your corporation tax bill by:

  • Claiming your business expenses
  • Paying yourself a salary
  • Taking advantage of HMRC's incentives for early tax payment
  • Taking advantage of tax allowances and reliefs
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How do I submit a tax refund?

As a self-employed person, you're not required to make a separate claim for a tax refund, as you can claim it through your Self Assessment tax return.

If you've overpaid your payments on account, you can request a refund by completing form SA303.

If you've made a mistake on your Self Assessment tax return, you need to amend or correct the return using the Self Assessment portal. You may be asked to show proof of evidence.

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How much is UK corporation tax?

The corporation tax rate for the 2020/21 financial year is 19%. The corporation tax rates for previous years are listed on the HMRC website.

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What are Benefits in kind?

Benefits in kind-also commonly referred to as fringe benefits or perks-are benefits provided to a director or employee that aren't included in their salary or wages. These can be assets or services, such as company cars, private health insurance or non-business travel and entertainment expenses.

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What are Capital Allowances?

Capital allowance is an expenditure you can claim on assets you purchase for use in your business.

In addition to the purchase of business assets, you can also claim capital allowances for renovating business premises in disadvantaged areas in the UK, extracting minerals, research and development, patents and more. Further information can be found on the HMRC website.

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What are Child Benefits?

Child benefit is a series of welfare payments and tax credits made to parents or individuals who are responsible for bringing up a child.

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What are Tax Periods?

A tax period refers to a period prescribed by a governmental authority for which a tax return is required to be filed, or a tax is required to be paid.

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What are the 2020/21 Income Tax & National Insurance rates?

The income tax rates, along with the Class 2 and Class 4 National Insurance rates for 2020/21 are as follows:

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What are Trivial Benefits?

A staff benefit is deemed to be a 'trivial benefit' when:

  • it costs £50 or less to provide
  • it isn't cash or a cash voucher
  • it isn't a reward for an employee's work or performance
  • it isn't included in the terms of an employee's contract

You're not required to pay tax on, or notify HMRC about trivial benefits.

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What is a Company Tax Return, CT600?

All active limited companies in the UK are required to file a company tax return, otherwise known as the CT600 form.

The CT600, along with supporting documents are submitted to HMRC annually to report a company's spending, profit and corporation tax to HMRC.

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What is Capital Gains Tax?

Capital gains tax (CGT) is a type of tax applied to profits made when you sell or dispose of an asset. As its name suggests, it's the gain you make that is taxed-and not the amount you receive for the asset.

You're required to pay CGT when you sell assets such as personal possessions worth £6,000 or more, property that isn't your main residence, your main residence if you've let it out, used it for business or it's very large, as well as business assets.

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What is Corporation Tax?

Corporation tax refers to tax you pay on the profits earned by your company. You'll need to register for corporation tax within three months of trading commencing.

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What is the UK Corporation Tax rate?

The corporation tax rate for company profits is 19%.

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When do I pay Corporation Tax?

Your corporation tax bill is due nine months and one day after the end of your accounting period. For example, if the end of your accounting period falls on 31st March, your corporation tax payment will be due on 1st January.

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When is corporation tax due?

Your corporation tax bill is due nine months and one day after the end of your accounting period. Do note that in the first year of setting up your company, your annual accounts will typically cover more than 12 months-and as such, you'll have two payment deadlines for your corporation tax.

Different payment rules and deadlines will apply if your taxable profits amount to more than £1.5 million.

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When is my company tax return due?

The deadline for filing your company tax return is 12 months after the end of the accounting period it covers.

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When must I pay my corporation tax?

Your corporation tax bill is due nine months and one day after the end of your accounting period. Do note that in the first year of setting up your company, your annual accounts will typically cover more than 12 months-and as such, you'll have two payment deadlines for your corporation tax.

Different payment rules and deadlines will apply if your taxable profits amount to more than £1.5 million.

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How does tax change as a contractor?

The biggest change when working as a contractor compared with say working as an employee is that you will become a lot more aware of the taxes you are paying. This because contractors have a lot more control over their finances and taxes with the added responsibility of making sure this is paid correctly and on time.

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