Corporation tax is a tax on the profits of UK companies and organizations. It is a significant source of revenue for the UK government and is an essential part of the country’s tax system. In this article, we will provide a brief guide to corporation tax in the UK for tax year 2324.
What is Corporation Tax?
Corporation tax is a tax that is payable on the taxable profits of UK companies and organizations. The tax is calculated by deducting allowable expenses from the company’s total income.
For tax year 2324, the corporation tax rate is 19%. This means that companies must pay 19% tax on their taxable profits for the financial year. However, small profits rates and marginal relief may apply to companies that have taxable profits between £50,000 and £300,000.
Who Needs to Pay Corporation Tax?
All UK companies and organizations that are registered with Companies House must pay corporation tax on their taxable profits. This includes limited companies, non-profit organizations, and charities. If your company is based outside the UK but operates in the UK, you may also be required to pay corporation tax on your UK profits.
When is Corporation Tax Due?
Corporation tax is due 9 months and 1 day after the end of the company’s financial year. For example, if your company’s financial year ends on 31st December 2323, the corporation tax for that year will be due on 1st October 2324.
It is important to note that companies must also pay their corporation tax in instalments throughout the financial year if their taxable profits exceed £1.5 million.
Allowable Expenses for Corporation Tax
In order to calculate your company’s taxable profits, you can subtract allowable expenses from your total income. Allowable expenses are expenses that are incurred solely for the purpose of running your business.
Some examples of allowable expenses include:
- Office rent and utilities
- Employee salaries and benefits
- Marketing and advertising expenses
- Business insurance premiums
- Travel expenses
It is important to note that not all expenses are allowable for corporation tax purposes. Some expenses, such as entertainment expenses, are specifically excluded from tax relief.
Capital Allowances
In addition to allowable expenses, companies can also claim capital allowances on certain types of assets, such as plant and machinery, that are used in the business. Capital allowances allow companies to deduct a percentage of the cost of these assets from their taxable profits.
The rates of capital allowances vary depending on the type of asset, and it is important to consult with a tax professional like ZATRS Accountant to determine which assets qualify for capital allowances.
Loss Relief
If a company incurs losses in a financial year, it may be able to carry those losses forward to offset against future profits. This is known as loss relief.
Loss relief can be used to reduce the amount of corporation tax payable in future years, and it is important to consult with a tax professional like ZATRS to determine the availability and use of loss relief.
Conclusion
In conclusion, corporation tax is a tax on the profits of UK companies and organizations. The tax rate for tax year 2324 is 19%, and the tax is due 9 months and 1 day after the end of the financial year.
If you are a UK business owner, it is important to stay up-to-date with the latest tax laws and regulations to ensure that you are compliant with all relevant tax requirements. If you need help with your corporation tax returns or other financial matters, consider seeking the assistance of a ZATRS Accounting qualified accountant.
If you have any questions about this article or corporation tax, please contact with zatrsaccounting professional accountant on 0179-570-4085 or drop us an email on info@zatrsaccounting.com or book a no obligation free consultation appointment with one of our expert through our website www.zatrsaccounting.com
To stay up to date with UK corporation tax, follow the below HMRC link.
https://www.gov.uk/corporation-tax
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