If you’re going to file a corporation tax return in the 2024/25 tax year, you may have some questions in mind. After all, tax returns are nothing short of complex.
But worry not, our simple, straightforward guide is here to help you complete your corporation tax return while ticking all the right boxes.
The basics of corporation tax returns
There are some key points to note before we get into the process of filing your corporation tax return. Firstly, the the amount of corporation tax you must pay is dependent on your company’s profits:
- Companies making over £250,000 in yearly profits pay a 25% corporation tax rate (also known as the ‘main rate’.
- Companies making under £50,000 in yearly profits pay a 19% corporation tax rate (also known as the ‘small profits rate’).
- Companies making between £50,000 and £200,000 in yearly profits pay the main rate of corporation tax, reduced by marginal relief.
Now, let’s get into how you can file your corporation tax.
1. Registering for corporation tax
Before you can start trading as a limited company, you need to register your company with Companies House. You’ll then get a letter with your company’s Unique Taxpayer Reference (UTR), which will enable you to register with HMRC.
Note that you have to register for corporation tax within three months of your company’s start date. Companies often register for corporation tax and as employers with Companies House simultaneously.
To register for corporation tax, sign in to your business tax account and follow the instructions.
You will need your company’s Government Gateway ID and password to complete this process. If you don’t have an ID, create one upon signing in. You’ll also need to have your company’s 10-digit UTR on hand.
2. Keep track of your accounts
Now that you’ve registered your company, make sure that your accounts are in order. This is essential for submitting an accurate corporation tax return.
It’s compulsory to accurately document all your company accounts, keep your information up-to-date and store them safely.
Remember that your taxable profits don’t just include what customers have paid for your products or services. Income your company receives from investments and asset sales are also taxable.
This is where a professional accountant can help. A financial expert can keep track of your accounts for you and help you prepare for your annual corporation tax payment, leaving you to focus on other aspects of your company.
3. Apply marginal relief
As mentioned earlier, if you earn pre-tax annual profits under £50,000, you pay the small profit rate (19%). If you earn over £250,000, you pay the main rate (25%).
If you earn between these figures, however, you pay the main rate but claim marginal relief. Marginal relief gradually increases your corporate tax rate from the lower small profit rate to the main rate, avoiding a sudden jump.
There is some information you should have on hand before calculating any claimable Marginal Relief:
- your company’s accounting period’s start and end dates
- the total pre-tax profit of your company
- any non-group distributions (often tax-exempt, but not always)
- any other associated company information.
Working out how much marginal relief to claim can be complicated, so we’d recommend reaching out to your accountant to make sure you get it right. You can also calculate your marginal relief using HMRC’s marginal relief calculator.
4. Pay your corporation tax bill
It’s now time to pay your corporation tax bill. You can pay your corporation tax via the following methods:
- direct debit
- online bank account payment approval
- online or telephone bank transfer
- at the local branch of your bank
- debit or corporate credit card online.
The deadline for paying corporation tax is typically nine months and one day after your company’s accounting period ends.
You can get a partial or full corporation tax refund if you’ve overpaid. To apply for a refund, head to the HMRC corporation tax refunds page.
We can help
At JTP Accountancy, we understand that corporate tax returns can be daunting, especially with the complexities of rates, reliefs and deadlines.
Our team of experienced professionals is here to guide you through every step of the process, ensuring compliance while maximising your tax efficiency. From registering for corporation tax to accurately calculating your payable amount and claiming any applicable marginal relief, we’ve got you covered. Let us handle your tax obligations so you can focus on growing your business.
Contact us today to ensure your corporate tax return is in expert hands.
