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 ‚Äòaccounting 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.
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%.
- HMRC's guide on corporation tax
- HMRC's guide on registering for corporation tax
- Rates and allowances: Corporation tax
- How to reduce your corporation tax bill
Self employed advisory fuel rates guide
Advisory fuel rates are recommended repayment amounts a company can use when reclaiming the fuel element on business mileage.
The rates are used to calculate:
- How much employers should reimburse employees for business travel using the company car
- How much employees need to repay employers for private travel using the company car
- The VAT you can claim back on business mileage using your personal vehicle
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.
How to claim for business mileage
Being self-employed often means having to juggle multiple roles and tasks.
Amidst all your different responsibilities, keeping track of your business mileage can appear tedious-and it can easily become a task that you postpone time and time again. Yet, these little trips can add up, and as a small business owner, it's important that you make the most of what you can claim.
If you're newly self-employed, or just want to get a grasp on the basics of claiming your business mileage, this article is for you.
It explains the essentials, including how you can calculate your costs, the records you need to keep, and other important information that you need to be aware of.
Both business owners and employees can claim business mileage.
Claiming mobile phone expenses when self employed
"Can I claim my smartphone as an expense?" is a simple, but a common question for first-time contractors.
That's because HMRC's expenses rules can be confusing, and while you want to be sure that you're running your business as tax-efficiently as possible, it's just as important to be in the good books of HMRC.
We've put together a short guide so you can get a quick overview of the basics. If there are any areas you're unsure about, you may check in with our accountants at Forma so you can be sure that you're claiming your limited company expenses correctly.
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.
How to reduce your Corporation Tax bill
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.
Limited company expenses & tax allowances guide
As a limited company director, you want to run your business in the most tax efficient way possible.
One way to achieve this is to claim for allowable business expenses correctly, so that you don't wind up having to pay more tax than you are legally obliged to.
It can be tricky figuring out what you can or cannot claim for, and this is where our guide comes into play.
We'll run through the different expenses you can claim for, but bear in mind that this isn't a definitive guide. Do check out our resource hub on limited company tax topics for more information, or consult our specialist accountants at Forma if you need personalised advice.
Self employed expenses & tax allowances guide
Allowable business expenses are costs that you can claim as a deduction against your revenue, which reduces the amount of tax you need to pay.
Here's an example: if your revenue is £35,000 and your allowable expenses total at £5,000, you'll just be taxed on £30,000.
The rules surrounding allowable business expenses aren't always straightforward, and this is where our guide comes into play.
In this article we will run through the most common expenses that sole trader businesses claim for, along with tips you can implement to ensure that you are keeping proper records.
Bear in mind that this isn't a definitive guide, so if you need personalised advice, it's best to consult our accountants atForma.
Can I claim expenses before my company was formed?
Yes. You can claim pre-trading expenses of up to seven years before the incorporation date of your limited company, as long as these expenses have been paid for with your own money and were incurred ‚Äòwholly, exclusively and necessarily' for setting up your business.
Examples of pre-trading expenses you can claim for include:
- Internet and domain name fees
- Purchase of computer equipment and software
- Accountancy and other professional fees
- Travel costs
To learn more about allowable business expenses, read our expenses and tax allowances guide for limited company directors.
Can I claim for fuel as well as mileage?
Mileage claims are designed to help cover your fuel costs, as well as the running costs of having a vehicle. As such, you can't make separate claims for individual expenses such as fuel, electricity or vehicle repairs.
Can I claim personally paid expenses?
There may be times when you have no option but to use your personal funds to cover company costs such as paying by cash or if you forget to bring your company card. It's important to keep a copy of the receipt of all expenses but this is especially important when paying for costs and expenses personally. This way, a record of the cost can be kept, logged in your company accounts and then your company can reimburse you for this.
Can I expense a Laptop?
The portability of a laptop brings in a layer of complexity, as they tend to be purchased for both business and personal use. You can claim it as an expense, but you will need to apportion between business and personal use.
Can I expense childcare?
As a sole trader, you can't claim childcare costs as a deductible business expense. However, you can claim tax relief through the tax-free childcare scheme.
As a limited company director, you can't claim childcare costs as a deductible business expense. However, you can claim tax relief through the childcare voucher scheme or tax-free childcare scheme.
Can I expense Computer equipment?
Yes, you can claim the purchase of computers as a deductible expense.