-
Accounts and corporation tax are two important aspects of running a business. Luckily 7M Accountancy has all the tools and experience to make this process as easy as possible for you and your business.
-
In the United Kingdom, companies are required to prepare annual accounts and pay corporation tax on their profits. Here are some key points regarding accounts and corporation tax in the UK:
-
Accounts
Accounts refer to the financial records and statements that a company prepares to track its financial transactions and assess its financial performance. These records are typically prepared annually, although companies may also prepare interim accounts on a quarterly or monthly basis.
-
Corporation Tax:
Corporation tax, also known as corporate tax or company tax, is a tax imposed on the profits earned by a registered company or corporation. It is distinct from personal income tax, which individuals pay on their personal earnings.
-
Annual Accounts:
Every company must prepare annual financial statements, including a profit and loss account, a balance sheet, and accompanying notes. The accounts should be prepared in accordance with generally accepted accounting principles, such as UK Generally Accepted Accounting Practice (UK GAAP) or International Financial Reporting Standards (IFRS). Small companies may be eligible for simplified reporting requirements.
-
Filing of Accounts:
Companies are required to file their annual accounts with the Companies House, which is the official registrar of companies in the UK. The deadline for filing accounts depends on the company's size and can range from nine to twelve months from the end of the accounting period.
-
Corporation Tax:
Corporation tax is levied on the profits of companies operating in the UK. The current corporation tax rate is 19% for most companies. However, the UK government has announced plans to increase the rate to 25% for larger companies with profits above a certain threshold starting from April 2023.
-
The Taxable Profit is calculated based on the company's financial statements, with certain adjustments for tax purposes.
-
Some expenses may not be deductible for tax purposes, while certain allowances, reliefs, and deductions may be available.
-
Tax Return and Payment:
Companies need to file a corporation tax return, which provides detailed information about the company's income, expenses, and tax calculation. The deadline for filing the tax return is usually 12 months after the end of the accounting period. Corporation tax payments are generally due nine months and one day after the end of the accounting period.
-
Group Relief:
Companies that are part of a group can often transfer losses or other tax reliefs within the group, allowing the profits of one company to be offset against losses of another. This can reduce the overall tax liability of the group.
-
Tax Planning and Compliance:
It's important for companies to engage in tax planning to ensure they comply with all relevant tax laws and regulations while optimising their tax position. This may involve seeking professional advice from accountants or tax advisors who specialise in corporate taxation.
Please note that tax laws and regulations can change, so it's essential to consult with a qualified professional or refer to the latest official guidance from HM Revenue & Customs (HMRC) for the most up-to-date and accurate information regarding accounts and corporation tax in the UK.