1. Introduction
If you’re asking how to pay company tax, it generally refers to paying Corporation Tax on your company’s profits. In the UK, limited companies must calculate, report, and pay their tax to HMRC within strict deadlines.
2. What Is Company Tax?
- Company tax in the UK is called Corporation Tax.
- It applies to company profits, including trading income, investments, and chargeable gains.
3. Current Corporation Tax Rate (UK)
- As of April 2023:
- 19% for profits up to £50,000.
- 25% for profits above £250,000.
- Marginal Relief for profits between £50,001 and £250,000.
4. When Do You Pay Company Tax?
- Corporation Tax must be paid 9 months and 1 day after the end of your accounting period.
- Example: If your company year ends on 31 December, you must pay by 1 October of the following year.
5. Filing a Company Tax Return
- You must file a Company Tax Return (CT600) with HMRC.
- Filing deadline: 12 months after the end of your accounting period.
- Must be submitted online using HMRC software or approved accounting software.
6. How to Pay Company Tax
You can pay HMRC through different methods:
- Online or Telephone Banking (Faster Payments, CHAPS, BACS).
- Direct Debit (set up through HMRC online account).
- Debit or Corporate Credit Card (online via HMRC).
- At Your Bank or Building Society (with a payslip).
7. Information You Need to Pay
- Company’s 17-digit Corporation Tax reference number (found on HMRC letters or online account).
- Amount due.
- Payment method.
8. Penalties for Late Payment
- HMRC charges interest on late payments.
- Penalties apply if you miss deadlines for filing the return.
- Persistent late payment can trigger compliance checks.
9. Reducing Your Company Tax Liability
- Claim allowable business expenses.
- Make pension contributions.
- Use capital allowances on equipment.
- Claim R&D tax credits if eligible.
Frequently Asked Questions
Q1: How do I pay company tax in the UK?
You can pay online, by direct debit, or via bank transfer using your Corporation Tax reference number.
Q2: Do all businesses pay company tax?
Only limited companies and certain organisations pay Corporation Tax. Sole traders and partnerships pay Income Tax instead.
Q3: Can I pay company tax in instalments?
Yes, large companies with profits over £1.5 million must pay in instalments. Smaller companies usually pay once a year.
Q4: What happens if I don’t pay Corporation Tax?
HMRC will charge interest, penalties, and may take enforcement action.
Q5: How do I find my company tax reference number?
It’s a 17-digit number provided by HMRC in your Corporation Tax correspondence.
Q6: Can an accountant handle my company tax payments?
Yes, accountants can file and manage Corporation Tax on your behalf.
Conclusion
To pay company tax, you must calculate your Corporation Tax, file a Company Tax Return, and pay HMRC by the deadline. Staying compliant avoids penalties and ensures your business runs smoothly. Using an accountant or accounting software can simplify the process.