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Taxable profits of limited companies and a number of other organisations are liable to pay Corporation Tax. Taxable profits which are liable to Corporation Tax include the profits from any income which is taxable, like trading or investment profits. Capital gains are also included as taxable profits, although they are known as chargeable gains for the purposes of Corporation Tax.

If the company is UK based, Corporation Tax has to be paid on all taxable profits, no matter which country they arise. If a company is based elsewhere in the world but has an operation or trades in the UK, Corporation Tax is only chargeable on the profits arising in the UK.

Payment of Corporation Tax and filing a limited company return are different to other forms of taxation, like income tax or VAT. The Corporation Tax has to be paid before the return is submitted to HMRC. The deadline for payment is before the payment for filing of the company return. It is usual to have a payment deadline of nine months after the end of the Corporation Tax accounting period. The deadline for filing the Company Tax Return is typically one year after the company’s Corporation Tax accounting period.

There are two rates of Corporation Tax comprising the lower rate, which is known as the ‘small profits’ rate, and the upper rate which is known as the main rate. The small profits rate is currently 21 percent, while the main rate of Corporation Tax is 28 percent.

About The Author

Gary Fields

Content Writer working alongside our expert accountants to bring you the latest Tax and Accounting news.

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