Key takeaways
- Companies incorporated through Companies House are automatically registered for Corporation Tax, and HMRC posts a 10-digit UTR to the registered office within 14 days of incorporation.
- Directors must tell HMRC the company is active within 3 months of starting to trade, advertising, employing staff, renting premises or earning any taxable income.
- Activation is completed online through the Government Gateway business tax account using the UTR, company registration number and the date trading began.
- Dormant companies notify HMRC in writing that they are not trading and do not need to file a CT600 Company Tax Return until trading actually starts.
- Late notification triggers failure-to-notify penalties under Schedule 41 Finance Act 2008, which can reach 100% of the Corporation Tax due where behaviour is deliberate and concealed.
Registering for Corporation Tax
Starting a new business can be stressful, there are so many things to consider. One of the most important things to take care of is registering for corporation tax. It's essential that you get this right from the start. In this blog post, we will cover what corporation tax is and why it's essential to register for it. We'll then guide you through the step-by-step process of registration, from pre-registration requirements to post-registration steps.
Why Register a Company for Corporation Tax?
You require to register a new company for the corporation tax within the 3 months of starting your business which includes:
- carrying on a business activity such as a trade or professional activity
- buying and selling goods with a purpose to making a profit
- providing professional services
- earning interest
- managing investments
- receiving any other income
Note that writing a business plan to get your business set up do not count as the start of your trading period.
What is Corporation Tax?
Corporation tax, a direct tax levied on a company's profits, includes taxable profits, chargeable gains, and the company's income. To comply with tax laws, companies must register for corporation tax, allowing them to report taxable profits, calculate tax liability, and pay tax to HMRC. It is the legal requirement of the company to work out how much corporation tax is payable.
Why is Registering for Corporation Tax Essential?
Registering for corporation tax is crucial for companies to comply with legal tax requirements and avoid penalties. It enables companies to file tax returns and pay their tax liability to HMRC, contributing to government revenue. Understanding the amount of corporation tax owed is vital for effective tax planning and financial management.
When to Register for Corporation Tax?
Most companies registers for the corporation tax and PAYE as an employer at the same time while registering the company for Companies House. But, if you have registered your company by post, through an agent, or using third-party software, you'll need to register for Corporation Tax separately. Make sure you register within 3 months of starting your business.
What Information will I Need to Register for Corporation Tax Online?
- Your company registration number - You can get it from the certificate of incorporation.
- Business start date - The date when the business became active. Your company’s first accounting period will start from this date
- Year end date - Date to which annual accounts will be prepared
- Your company's unique taxpayer reference (UTR) number.
- Company name and company address
- Nature of the business
- Name and address of the company directors
How to Register for Corporation Tax?
- Sign in to your business tax account using your Government Gateway user ID and password to register for Corporation Tax. If you do not have a government gateway account user ID, you can create one when you sign in.
- HMRC will verify your Corporation Tax registration within seven days. You will receive an Activation Code (or PIN) at your registered office address. Activate your HMRC online services as soon as you get this code as the code remains valid only for a short period of time.
- The information you provide to HMRC will be used to determine your company’s corporation tax accounting period and your deadlines for filing Company Tax Returns and paying Corporation Tax.
- Also register for Value Added Tax (VAT) and set up your online VAT account with HMRC if the company's VAT-taxable turnover is more than £90,000 (VAT registration threshold for 2024/25 tax year) in a 12-month accounting period.
- Register PAYE for Employers at the same time as registering for Corporation Tax online.
What Happens After Registering for Corporation Tax:
After successful registration, HMRC will issue a Corporation Tax reference number. You'll then be required to:
- Maintain Records: Keep accurate financial records in accordance with HMRC guidelines.
- Submit Annual Tax Returns: File your Corporation Tax return annually, providing details of your company's profits and any applicable deductions. You need to file a Company Tax Return, even if you make a loss or have no Corporation Tax to pay. This should be done within 12 months after your accounting period ends.
- Pay Corporation Tax: You are responsible to calculate your corporation tax you owe and pay it. Use our Corporation Tax Calculator to work out how much tax you need to pay. You must pay within 9 months and 1 day from the end of your 'accounting period' - which is usually your financial year.
What Accounting Records Do I Need to Keep?
- Annual accounts, including profit and loss (income statement)
- Bank statements, paying in slips, cheque books and details of amounts paid or received electronically
- Cash books and other account books
- Purchase and sales invoices
- Credit or debit notes (issued or received)
- Order and delivery notes
- Records of daily earnings
- Payroll records
- VAT records
Corporation Tax Payment Deadline
A company must pay the corporation tax online by nine months and a day after the accounting period end. For example, if a company's year-end is 31 December 2025, it must pay any corporation tax due by 1 October 2026.
Ready to Make Tax Compliance Easier?
At GoForma, we specialise in supporting businesses like yours. Check out our TrustPilot reviews to see why companies trust us for their accounting needs. Don't let tax obligations hinder your growth – hire GoForma's expert small business accountants today. Your success story begins with us. Discover the GoForma advantage today!
