What is a Company Tax Return?
Limited companies are required to file a company tax return, which serves as an official record of the company's financial activities, profits, and losses during the tax year. This filing is essential for businesses to report their financial information to the government and determine their tax liability. By calculating the amount of corporation tax a business needs to pay, the company tax return helps owners fulfill their legal obligations.
What Constitutes a Company Tax Return?
A company tax return, also known as CT600, is a form that must be submitted to HM Revenue and Customs. It includes information from the company's annual accounts, adjusted profits, capital allowances, and tax liability. Filing it online through the government services website is mandatory for corporation tax purposes. Ensure accuracy and completeness while providing necessary details like reference number, accounting period, financial year, and tax year dates.
What is a CT600?
The CT600 form, is the official form for filing a company tax return. Structured into sections like company, accounting, tax, profits, capital allowances, and tax liability, it requires accurate information that matches the company's annual accounts, financial report, and tax calculations. Understanding and correctly filling out the CT600 form is essential to avoid errors and penalties.
Who Needs to File a Company Tax Return?
When it comes to who pays corporation tax, the legislation applies to:
- UK limited companies
- Foreign companies with offices in the UK
- Members clubs, societies, and associations
- Trade associations
- Housing associations
- Groups of individuals carrying out a business (such as co-operatives)
What Information Do I Need to Provide for a Company Tax Return?
Gathering and organizing financial information is crucial when preparing a company tax return.
- A properly completed form CT600 and any relevant supplementary pages
- Statutory accounts
- Profit and loss accounts — which gives an overview of your businesses’ trading over a period of time
- Balance sheet that provides a snapshot of your business's financial condition at any given time
- Director’s report which states primary activity of the business, names of any directors, policies on employees, details of any political or charitable donations
- Corporation Tax calculation - You can use Corporation Tax Calculator to work out adjusted profits for Corporation Tax purposes. The rules can be quite complex, you should hire a small business accountant to get valuable insights on understanding this complex process.
- Company Tax return
- Company name and number
- Officers (directors and company secretary)
- Registered office address
- Persons with significant control (PSCs)
- Members (shareholders, guarantors, or LLP members)
- Share capital (companies limited by shares only)
For first-time filers, understanding the CT600 form and its sections is essential, as it outlines the required information. Consider seeking the services of an accountant to simplify the process.
How to File a Company Tax Return
Companies must file their Corporation Tax Return online with HMRC.
To file online, companies need to register with HMRC, where they will receive a user ID and password.
Additionally, it's essential to file the accounts with Companies House. This can be done either online or via post, although online filing is not yet mandatory. To file online, companies must obtain an authentication code from Companies House.
For added convenience, there is an option to file jointly through the HMRC website.
While it is possible to prepare and file your own Company Tax Return, it's advisable to consider hiring limited company accountants unless you are completely confident in completing the return accurately.
Company Tax Filing Deadline
The filing deadline for company tax returns is typically 12 months after the end of the accounting period for online filing. HMRC will send a ‘Notice to deliver a Company Tax Return’ to your registered office address. Your company tax filing deadline is included in this letter.
Late Filing Penalty for Corporation Tax Return
Late filing of a company tax return can lead to penalties, starting from £100, depending on the number of days overdue.
For three consecutive late filings, the £100 penalties will be increased to £500 each.
How Do I Pay my Corporation Tax bill?
Explore various payment options available for settling your corporation tax bill.
- Direct debit
- Through your online bank account
- Online or telephone bank transfer
- By debit or corporate credit card online
- Pay at your branch by cash or cheque if you have a paying-in slip from HMRC
When is Corporation Tax Due?
For taxable profits of up to £1.5 million - You must pay your Corporation Tax 9 months and 1 day after the end of your accounting period.
For taxable profits of more than £1.5 million - You must pay your Corporation Tax in installments.
Ready to File Your Company Tax Return?
Filing your Company Tax Return can be a complex and time-consuming process. To ensure that your return is accurate and submitted on time, consider hiring experienced limited company accountants from GoForma. Our team specializes in tax compliance and can help you understand and manage the process with ease.
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FAQs on Filing the Company Tax Returns
What type of tax return do I need for Corporation Tax?
To pay Corporation Tax as a limited company, you must submit a Company Tax Return. Your submission of this return provides HMRC with the necessary information to calculate the amount of Corporation Tax you owe.
Do I still need to submit a tax return if my company made a loss?
You must still send a return if you make a loss or have no Corporation Tax to pay because HMRC will not know your tax liability until they receive your tax return.
Will I need to send a Company Tax Return for a dormant company?
Once you've informed HMRC that your company is dormant, you are not required to pay Corporation Tax or submit another Company Tax Return unless you receive an additional notice instructing you to file a Company Tax Return.
Is Company Tax Returns the same as submitting accounts?
No, the Company Tax Return and the Company Accounts are different. The Company Tax Returns is sent to HMRC, where they assess and collect the Corporation Tax owed by the company.
On the other hand, your Company Accounts are submitted to Companies House, who file them with your record for public viewing.
How much is the Corporation Tax rate in 2023/24?
from 1 April 2023, for companies with profits under £50,000, the corporation tax rate is 19%, where the main rate for companies with profits over £250,000 is 25%. All other businesses that file profits from £50,001 to £250,000 will receive marginal relief of 26.5%. Marginal relief introduces a gradual rise in corporate tax rates for companies generating profits between the lower and upper limits. Let's consider a business with a taxable profit of £75,000. This company would be subject to a 19% tax rate on the initial £50,000 and a 26.5% rate on the subsequent £25,000, resulting in a total tax payment of £16,625.