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| PET GAZETTE | BUSINESS FOCUS
YOUR GUIDE TO
CORPORATION TAX
159 independent retailers opened in the UK in 2016 and more new stores are entering
the market this year. The Forum of Private Business explains how newly launched
businesses can avoid costly mistakes when setting up Corporation Tax
C
orporation tax is charged on
the taxable profits of limited
companies as well as on
those of some clubs, societies,
association and co-operatives.
This guide provides an
introduction to corporation tax for private
limited companies. Corporation tax does not
apply to sole traders or partnerships.
WHAT IS CORPORATION TAX?
Corporation tax is similar to income tax but
for registered companies. It is charged on the
taxable profits of all registered companies
that have been incorporated at Companies
House. Taxable profit is the amount of
profit remaining after the deduction of tax
allowable expenses and reliefs.
Corporation tax is calculated on different
types of taxable profits and chargeable
gains, including:
n Trading profits - the income from a
company’s trading activities after allowable
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expenses have been deducted.
n Capital gains - the chargeable gain or
profit made when a company asset such as
land or buildings is sold.
n Any other income - for example, money
made from leasing land or buildings or
interest on company savings.
Corporation tax is payable on the income
and taxable profits made during a specific
accounting period which cannot be more
than 12 months long. The accounting period
is usually the same as the company’s financial
year, which is the period covered by its
annual accounts.
Accounting periods can sometimes
differ from the financial year, for example
if accounts cover a period of less than
12 months due to the business being
closed down. There is more information
about accounting periods at www.gov.uk/
corporation-tax-accounting-period.
The rate of corporation tax is 19 percent
HINTS AND TIPS
1 It is important to be aware of
filing and payment deadlines
so that documents can be
filed and the tax due can be
paid on time.
2 Sufficient time should be
allowed to enable an online
account to be set up so that
information can be filed
online with HMRC well within
all deadlines.
3 HMRC will require authority to
correspond with an accountant
who has been instructed to act
as the company’s agent.
from April 1 2017 (for all profits except ring
fence profits).
July 2017