Corporation Tax is a tax that is levied on the profits of limited companies, foreign companies with a permanent establishment in the UK, and some other types of organizations in the UK.
As of the tax year 2022/23, the current rate of Corporation Tax in the UK is 19%. This rate applies to all companies with profits of up to £50,000. For companies with profits above £50,000, there is a two-tier system:
Corporation Tax is calculated based on the taxable profits of a company, which are its total profits for an accounting period minus any allowable expenses and deductions. These deductions can include expenses such as salaries, rent, and office equipment.
Companies are required to file a Corporation Tax return with HM Revenue and Customs (HMRC) every year, which includes details of their profits and tax liability. Companies also need to pay their Corporation Tax liability within nine months and one day of the end of their accounting period.
There are several reliefs and allowances available that can reduce the amount of Corporation Tax payable by a company. For example, capital expenditure on certain types of equipment and machinery can be deducted from a company's profits, and research and development tax credits are available for eligible companies.
Like other types of taxes in the UK, Corporation Tax is subject to change by the government, and it's important for companies to stay up-to-date with any changes that may affect their tax liability.
