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Tax

Corporation Tax

Corporation tax is payable by legal entities such as a limited company. Although the basic rules for computing taxable profits are the same as income tax, there are significant differences in the computation and administration of the tax.

From 1 April 2011 companies and organisations must submit returns online and pay electronically in a particular format.

Further information is available at:
http://www.hmrc.gov.uk/ct/index.htm

Starting up a new limited company
HMRC sends a newly formed limited company form CT41G (Corporation Tax - Information for New Companies) within a few days of the company being registered at Companies House. This form is usually sent by post to the company's registered office.

Regardless of whether the form CT41G is received, there is a legal obligation to inform HMRC within three months of your company becoming active, for example by starting business activity or starting to trade. This may be done online.

Deadlines for paying Corporation Tax
Corporation tax is payable before the corporation tax return is due. The Corporation Tax payment deadline is known as the “normal due date”. The actual payment deadline varies depending on how much taxable profit your company or organisation makes:
* Taxable profits of £1.5 million or less: Corporation Tax is payable by the normal due date, which is nine months and one day after the end of your Corporation Tax accounting period (normally the same as the statutory accounting period for accounts to be filed at Companies House).
* Taxable profits are more than £1.5 million: Corporation Tax is normally payable in instalments.

Company Tax Return filing deadline
You must normally file your company or organisation's Company Tax Return (including other supporting documentation) within 12 months of the end of the company or organisation's Corporation Tax accounting period.

The Company Tax Return to HMRC must be filed online for accounting periods ending after 31 March 2010. Tax computations and, with very few exceptions, the accounts that form part of your Company Tax Return, must be submitted in Inline eXtensible Business Reporting Language (iXBRL) format.

Penalties for late submission of the Company Tax Return: flat rate penalties payable even if no CT is due:
* 1 day late: £100
* 3 months late: a further £100 penalty.
* 18 months late: 10 per cent of any unpaid Corporation Tax
* 24 months late: a further 10 per cent of any unpaid Corporation Tax.
* late for three or more accounting periods in a row: the initial flat-rate penalty increases to £500 with a further £500 charged if the return is filed more than three months late.

[Page updated: 04/01/2012]

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