What is corporation tax?

Corporation tax is payable on the taxable profits of limited companies. Taxable profits are made up of profits from trading and most investments, along with any ‘chargeable gains’ made by the company, which is the term used when a company makes capital gains.

As a contractor, freelancer, or consultant, your company profit is, broadly speaking, the company income before VAT less company expenses.

For companies based in the UK, corporation tax is applied to all taxable profits, no matter where in the world the profit was made.

What are the corporation tax rates?

Historically there have been been two rates of corporation tax: for smaller companies with a profit of £300,000 or less the ‘small profits rate’ is applied, at 20% for the 2014/15 tax year; and for companies with a profit of £1.5 million or more, the main rate of corporation tax is applied, at 23% for the 2014/15 tax year.

For companies with a profit between these two limits a sliding scale of corporation tax is worked out so that ‘marginal relief’ is given. These companies will therefore pay more than 20% but less than 23%, with the exact amount depending on their profit.

However, from the 1st of April 2015 there will be one unified rate of corporation tax and this will be at 20%.

For small companies this will not have an impact but larger companies will find that the profit from acounting periods spanning the two tax years will be apportioned over two corporation tax rates.

What does a company need to do for corporation tax?

A company has several obligations with regards to corporation tax and the main points are as follows:

  • A company must tell HMRC within 3 months of starting to trade that it is liable to corporation tax.
  • Corporation tax must be paid by nine months and a day following the end of the company’s corporation tax period.
  • A corporation tax return must be submitted by 12 months after the end of the company’s corporation tax period.
  • Helping you to meet your company’s corporation tax obligations is part of Integro Accounting’s fixed fee service.

Why choose Integro Accounting?

Integro Accounting provide a fixed fee limited company accountancy service to contractors, freelancers and consultants. Integro accounting was founded on the word integrity. Clients rate us 5/5 on Google and we pride ourselves on building a completely transparent and personal relationship with our clients.  For just £100 + VAT per month, you can have a partner integral to your contracting career.

  • All-inclusive price – no hidden charges, one comprehensive package.
  • A dedicated accountant – one person who will support you every step of the way.
  • Unlimited face to face meetings – offices available across the UK.
  • FREE award-winning accountancy software – a FreeAgent license provided to all clients.
  • 24/7 access to your accounts – complete visibility of your accounts whenever and wherever you are.

Speak to one of our expert accountants today on 0207 0962659 or email christian@integroaccounting.com for more information on how we can help you.