Company Tax Returns are a necessary evil when you run a limited company. You’ll need to keep accurate financial records so you can complete your tax return correctly, so HMRC can make sure your business pays the right amount of Corporation Tax on any profits it makes. Try to control your enthusiasm while we explain what you need to show on your Company Tax Return.
Who has to file a Company Tax Return?
Limited companies must submit a Company Tax Return once HMRC sends a ‘Notice to deliver a tax return’. You’ll need to submit a return even if your company hasn’t made any profits, or if no Corporation Tax is due. HMRC won’t know what’s going on unless you send one, so they’ll slap you with a late filing penalty if it’s overdue.
Limited liability partnerships (LLPs) don’t normally need to file a Company Tax Return, though they might if they are:
- Not conducting business in order to make a profit
- Being wound up by court order
- In liquidation
Do sole traders and partnerships submit Company Tax Returns?
Sole traders (and individual partners in partnerships) don’t pay Corporation Tax, and they don’t need to submit a Company Tax Return. But, as the saying sort-of goes, tax is inevitable, so you’ll still need to declare your earnings and pay tax another way – usually by submitting a Self Assessment tax return.
Can I do my own Company Tax Return?
Legally speaking, yes, you’re allowed to complete your Company Tax Return yourself. They can be incredibly confusing though, and lots of companies prefer using an accountant to help them.
What does a Company Tax Return show?
Your Company Tax Return tells HMRC how much your company earned during the financial period covered by the return, and how much it spent. You’ll use the figures shown in your profit and loss report for the purposes of Corporation Tax. This isn’t the same as the profit or loss figures displayed in your annual accounts, because your tax return deals with taxable profits.
How do I submit a Company Tax Return?
Assuming you don’t need an auditor (and small companies usually don’t), you can go online to file your tax return with HMRC and your accounts with Companies House at the same time. The paper CT600 Company Tax Return is only available if you’re not able to submit an online return, or if you wish to submit a return in Welsh.
You will also need to submit the accounts and computations section of the tax return in the Inline eXtensible Business Reporting Language (iXBRL) format. If this all sounds rather daunting, HMRC have published a CT600 Guide which you may find useful. Not an exciting read, but useful. And of course, you can always seek professional help rather than trying to go it alone!
Making Tax Digital for Corporation Tax
HMRC are also in the process of rolling out a new scheme for recording and submitting tax records, known as Making Tax Digital (MTD). The plans for MTD for Corporation Tax are still underway, but you can track the scheme’s progress at our MTD information hub.
What accounting records must I keep for Company Tax Return purposes?
Your financial records show all of the company’s transactions and will help you understand the health of the business. They’re particularly crucial for helping you complete your tax return correctly. You should keep records even if you don’t make a profit, stop trading, or don’t need to submit a tax return.
- Details of any company assets, such as equipment or vehicles. This includes the purchase or disposal of assets too.
- Details of any stock that’s still in the company’s possession at the end of the financial year.
- The company’s income and expenditure, its costs, and any liabilities (such as any loans it’s repaying, or staff costs). This also includes your director’s loan account.
Having your bookkeeping in good order will allow you to file your Company Tax Return accurately and on time, without having a full-blown meltdown of stress and confusion. It also means you can calculate your tax bill as you go, making it easier to plan your cash flow.
As well as listing each transaction, it’s useful to keep any documents that go with your records, such as receipts or invoices, and mileage logs. And yes, we’re big fans of keeping documents digitally!
Will I get fined if I file my Company Tax Return late?
Unfortunately, yes. And if it’s extremely late, you could even end up being prosecuted. These are the penalties you can expect for not filing on time.
| How late is your return? | Penalty |
| One day late | £100 |
| Three months late | A further £100 |
| Six months late | HMRC will make an estimation of what your Corporation Tax bill should be. An extra 10% of the bill will then be added as a penalty. |
| 12 months late | An additional 10% of the tax liability is added. |
How much will I need to pay once I’ve submitted my Company Tax Return?
Corporation Tax is charged based on your company’s taxable profits. There aren’t any tax-free thresholds or varying rates like you get with personal income tax, but limited companies can, where applicable, claim for allowable deductions and expenses that can help lower their bill.
| Profit Threshold | Small profit rate | Less than £50,000 | 19% | COPY | More than £250,000 | 25% |
We haven’t missed a line out of the table. If your company’s profits are between £50,000 and £250,000, you’ll pay a marginal rate of Corporation Tax (so somewhere between 19% and 25%, depending on how much profit you make).
When do I need to pay my Corporation Tax bill?
The deadlines for paying your Corporation Tax and filing a Company Tax Return are not the same, and your payment deadline depends on how much you owe.
- If your taxable profits are £1.5 million or less, the deadline to pay your Corporation Tax bill is 9 months and 1 day after the end of the accounting period that it covers
- You’ll need to pay your Corporation Tax bill in instalments if your taxable profits are more than £1.5 million
Your accounting period is usually the same as the financial year covered by your company’s yearly accounts. Sometimes these are different, such as if you’re still in your first year of trading. If this is the case, you’ll need to submit two tax returns to cover your first year.
How do I pay my Corporation Tax bill to HMRC?
For companies with taxable profits of up to £1.5 million, the payment deadline is 9 months and one day after your accounting period has ended. You can pay online, through telephone banking, or using CHAPS or Direct Debit.
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