Tax is a liability for any business owed to the government. Corporation tax is one of the most important taxes to be paid by small firms in the UK. A piece of precise knowledge of corporate accounting for small business is worth the time invested in acquiring it. As long as you are earning, you are liable to pay the corporate tax to the government. In general, tax is the sum that one pays for just existing as a revenue-generating body to the authority of the area you are working in. Taxes are of multiple kinds, and corporate tax is one of them.
Meaning
The tax that a limited company pays to the country’s government, where the business is primarily and officially centric, is the corporate tax. Further simplifying, it is also called a company’s tax. We need to understand that your company can be functioning in various other countries. Still, you do not pay the corporation tax to all the countries your business is operating in. Instead, it goes to the government of the country you are based in.
UK Corporation Tax
Until 1965, the UK based companies had to pay the normal income tax on revenue generated till the 1st of April when the FINANCE ACT 1965 was passed, which replaced Income tax with corporate taxation.
Items Included:
- Trading Profits
- Investments
- Gain through the sale of assets
Features
It must be passed annually by the parliament to collect it. Corporate tax is charged based on the company’s accounting period, anywhere from 9 to 12 months. The current corporation tax in the UK is 19% on resident companies; however, relief of EURO 300000 to EURO 1.5 MILLION is provided to ring-fenced companies. Her Majesty’s Revenue and Customs administer the tax.Small business accounting services incorporate all work related to corporation tax.
Model Simplification Example
Suppose you start a corporate company and you base the company in the UK. This means that all the revenue generated from overseas trading, including the domestic trading and the two items mentioned above, would make way for a corporate tax of 19 per cent based on your accounting period to be paid to the Government of the UK.
Recent Update
The United Kingdom is about to increase the corporate tax rate to 25 per cent in 2023 for a level and above of revenue.
Disclaimer
The accounting period of the UK starts from the 1st of January to the 31st of December the same year, but companies can have a different pattern.
Filing corporation tax and keeping up with all related suits is not a meagre task. Therefore, it requires more work and expertise. At FinBridge, we facilitate our customers with corporation tax submission and related suits as a part of our service. With us, you do not have to take the load of accounting.
FinBridge has an expert team that handles the finance of small and rising businesses so that they don’t have to acrobat things that have no major contribution to productivity. Our team consists of experts and professionals who have sound and profound knowledge of finance. We make sure that our service brings prosperity and growth along with the satisfaction of accuracy. We provide the best accuracy in your businesses accounting and tax services.