There’s no deadline to file a company tax return, but HM Revenue & Customs (HMRC) says it wants to remind small businesses about the importance of doing so. If you’re due to file your return, there are some things you’ll want to do before April 5th 2019 – such as getting your books up to date, calculating your profits and losses, and making sure you’ve paid enough tax. Here’s everything you need to know.
If you’re employed by a limited company, you’ll normally pay National Insurance Contributions (NICs) on behalf of yourself and your employer. You can deduct those costs from your taxable profits, reducing how much tax you owe.
You might also be able to reclaim VAT (Value Added Tax) that you’ve already paid on goods and services bought during the previous financial year. This applies to companies whose turnover exceeds £85 million per annum.
Your company must keep records of all purchases, including invoices and receipts. These can help you calculate your taxable profits. If you use software to manage your accounts, make sure you check your settings to ensure you’re recording accurate data.
The amount of tax you owe depends on what type of company you run. A sole trader pays self-assessment tax based on his/her net earnings. Limited companies and partnerships pay corporation tax based on their total annual profits.
Limited companies and partnerships are taxed at different rates depending on whether they’re incorporated or unincorporated. Incorporated companies are liable for corporation tax at 20% of their profits. Unincorporated companies are subject to a lower rate of 10%.
Incorporated companies can choose to be treated as unincorporated entities, but this requires them to register with the Inland Revenue Authority of Ireland (IRAI). They can then opt out of being taxed at the 10% rate.
Obtain a free guide to submitting a business tax return.
Filing a company tax return doesn’t have to be complicated. In fact, most people don’t even know how to do it properly. But there are some important things you need to take into account before you start. You’ll find everything you need to know about what to include in your return here. Our free guide includes information about the different types of companies, the type of tax you pay, and where to file your return. If you’re ready to file, simply download and print off your form and send it off to HMRC.
What is a business’s tax return?
A company tax return is a statuary requirement for all UK businesses. This includes sole traders, partnerships and limited companies.
There is no set deadline for submitting a company tax return. However, it is important to note that HMRC requires you to submit your annual accounts within three months of the end of the financial year. If you fail to do so, you could face penalties.
Companies must file a company tax returns each year. They are required to provide information about their income and expenses, including VAT receipts.
When to file a business tax return
The deadline to file your company tax returns for 2018/19 is midnight on April 18th 2020. If you are filing a self assessment tax return, it is due on June 30th 2020. This includes HMRC’s Self Assessment Service (SAS).
If you are filing a corporation tax return, it is now due on October 31st 2020.
You do not have to pay corporation tax if you are a limited company. However, if you are a sole trader or partnership, you will still have to pay corporation tax on your profits.
There is no extension to file your company tax or corporation tax returns.
Limited company tax return example
A limited company is a type of legal entity used to limit liability, protect assets, and provide additional benefits such as employee pension schemes. A limited company is different from a sole trader because it has shareholders. You are required to file a limited company tax return each year. This includes filing your annual accounts, including profit and loss account, balance sheet and cash flow statement.
Your company tax return should include the following information:
• Articles of Association – These documents set out how you operate your company. They contain provisions about directors, shareholders, members, managers, and employees.
• Corporation Tax Bill – Every company needs to pay corporation tax based on profits earned during the financial year. Companies have to submit a corporation tax bill to HMRC within six months of the end of the financial year.
• Accounts – All companies must keep records of income and expenditure. This includes bank statements, invoices, receipts and expenses incurred.
• Balance Sheet and Cash Flow Statement – These reports show where your money came from and went during the financial year. You must report the value of your shares, loans, investments, property, plant and equipment, and intangible assets.
What is a CT600?
A CT 600 is a report published by HM Revenue & Customs. This includes all kinds of tax information about your company. You must file a CT 600 if your company earns over £83,000 per annum, or has an annual turnover above £1m.
When filing a CT 600, there are several calculations you need to make. These include calculating taxable profits, chargeable gains and losses, and other things.
What are the consequences for filing a business tax return late?
Late filing of a company tax return is a criminal offence under UK law. This includes late payment of corporation tax. If you fail to pay corporation tax within 28 days of the due date, HMRC can impose a penalty of up to 50 per cent of the unpaid amount plus interest. However, there are some exceptions to this rule. For example, if you do not receive notice of the due date, you can still apply for an extension of time to file your return. You must notify HMRC of the reason for your delay. HMRC can grant extensions for up to 12 months.
If you miss the deadline by one month, you can avoid a penalty by paying the outstanding taxes and interest immediately. If you missed it by more than one month, you can pay the overdue tax and interest and request an extension of time to repay the balance. HMRC will consider granting an extension if you show good cause for missing the deadline.
HMRC will also waive the late payment penalty if you make full repayment within 14 days of receiving notice of the penalty. In addition, HMRC will waive the late payment penalty for certain small businesses if they can demonstrate that they had reasonable grounds for failing to meet the deadline.
The penalty applies to both individuals and companies. HMRC does not distinguish between different types of organisation – whether charitable, religious, educational or otherwise.
How to pay your company tax bill to HMRC
There are two ways to pay you corporation tax bill: online or by post, depending on whether you want to make it easy for yourself or not. If you want to avoid the hassle of writing out cheques, there are many companies that offer online payment options. However, if you prefer to keep things simple, sending off a cheque might be the way to go. Here we explain how both methods work.
If you use one of the following providers, you can pay your corporation tax bill online:
• PayPoint – You can pay your corporation tax liability via PayPoint.com.uk.
• Direct Debit – You can pay your Corporation Tax liability via Direct Debit.
• SagePay – You can pay your Corp Tax liability via SagePay.com.
What are the consequences for late payment of corporate taxes?
Late payment of corporation tax incurs interest charges and could lead to fines. If you pay your corporation tax late, HM Revenue & Customs (HMRC) will charge you interest on the amount due. This interest must be included in the calculation of how much you owe. You’ll also be charged £20 per day plus VAT for each overdue payment. However, there are some exceptions to this rule.
If you’ve already been sent a demand letter, you won’t have to pay any interest. But if you don’t respond to the demand letter within 21 days, you’ll be liable for interest on the outstanding amount.
You can deduct the interest you pay on late corporation tax against your income tax bill. So if you’re self employed, you might want to consider making sure you pay your taxes on time.
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Frequently Asked Questions
How to make modifications to your Business Tax Return
If you realise you have made an error on your company tax return, you don’t have much time to fix it. You have just over a month to amend the return – and even then, HM Revenue & Customs (HMRC) won’t extend the deadline. But there’s no reason why you shouldn’t try to make changes if you haven’t already submitted your return. In fact, it might be worthwhile making changes now, because HMRC will charge you a larger fine if they find out about your errors later.
The penalties depend on how serious the mistake is, and whether HMRC finds out about it themselves or whether you’ve alerted them. For example, if you’re found to have failed to include VAT on some goods sold, you’ll face a fine of either £10,000 or 30 per cent of the total tax due, whichever is lower. If you fail to report income, you can be fined between £5,000 and £50,000 depending on the circumstances.
However, if you do submit a corrected return within the allowed period, HMRC will usually waive the penalty. They will also reduce the penalty if you notify them of the mistake earlier, such as when you file your return online.
When to submit a business tax return
The deadline to file your company tax return is 31 December each year. If you are a limited company, the date is normally the same as the end of your financial year. However, there are certain exceptions to this rule.
Your company must report income for each accounting period, even if you don’t actually make any sales during that period. For example, if you receive £1 million worth of dividends in April, you still need to account for that money.
If you’re a sole trader, your company’s financial year ends on 30 June each year. So, if you received £10,000 in wages, you’d need to include those earnings in your annual returns.
Companies House will set a day each year for the end of your financial period. In most cases, this is the last day of the next calendar month.