If you run an LLC that is making profits in the UK, you'll need to pay corporation tax. While it's an issue for some business owners, it's also one of the main taxes you'll need to pay.

It's not just because of the essential revenue stream it offers for the UK government but also because of the high penalties you'll face when you make a late payment or don't accurately calculate the amount.

Because of the frequent changes and reforms, this procedure isn't always straightforward, particularly for new businesses.

We've put together this straightforward guide to corporate tax to help you understand taxation more thoroughly, follow the regulations set by HMRC and avoid being penalized by deadlines.

Before we take you through the specifics, what is corporate tax and who is require to pay this tax?

WHAT IS CORPORATION TAX?

As the name suggests, "corporation tax" refers to the levy companies pay within the UK. Like taxation on individual income, the calculation is based on the company's annual earnings, which means that the amount paid differs for businesses.

However, unlike income tax, businesses have to calculate and report their payment on their own or with the assistance of an external accounting firm.

WHO NEEDS TO PAY CORPORATION TAX?

Any limited corporations must pay tax on corporations. Additionally, however, there are several types of non-limited entities that could be subject to tax which include:

● Housing associations

● Co-operatives

● Societies and clubs

● Associations of members

Corporation tax doesn't apply to partnerships or sole traders. Instead, they need to pay their tax on income through self-assessment tax returns. If a business is located within UK areas, it must pay tax on all its earnings from the UK and overseas.

If an international business has a branch in the UK and a branch in the UK, it must pay tax to the UK corporation on profits from activities in the UK.

WHAT ARE THE CURRENT RATES?

The tax rate for corporations has been set to 19 percent on all business earnings. The rate has remained unchanged from April 2016 and will likely remain the same for the coming two years.

The government had planned to reduce rates to 17%; however, the plan was canceled in the budget of March 2020 in response to the outbreak of coronavirus.

HOW DO I REGISTER FOR CORPORATION TAX?

If you've recently started your own business, which you have registered at Companies House, it's time to sign up for tax registration. It's necessary to register within 3 months of completing operations, or you'll be slapped with penalties and fines. If you're unsure which activities are relevant, then you should look up this information here.

To sign up, you must go to the Gov.UK website and sign up or create a business account. Follow the instructions and fill in your information through HMRC. Before you enter the details, you must keep the following details in the table:

● The firm's Government Gateway user ID and password

● Your company's 10-digit Unique Taxpayer Reference (UTR)

● The name of your company

● Your business's primary address

● The registration number for your company.

● The name and address of the directors.

● The date you began conducting business

● The day your annual accounts set to

Once you've entered your company's information, you'll need to complete a Company Tax return. We will then discuss the process for filing.

HOW To FILE Corporation Tax For UK Companies?

To file corporation tax for UK companies you need to fill CT600 form.  The  CT600 Form, the business tax return is submitted by businesses to report their corporate tax information to HMRC. Tax return forms must be submitted annually, and the due date is determined by your business's accounting period.

If you're unsure which period you're in, it is possible to find out through the HMRC company tax accounts. In most circumstances, you'll have to fill out the form electronically. If you're filling out the CT600 document in Welsh or cannot find it online, you may request a printed version.

If you decide to use this method, you'll also need to complete a WT1 form stating why you chose to use an old-fashioned paper form. The CT600 has 11 pages; however, most questions don't pertain to your company. This form will be asking you questions concerning the following topics:

● Your company's fundamental information

● Your accounting period

● The turnover of your company

● The earnings of your company

● The deductions and reliefs your company receive

● Your corporation tax calculation

Completing your CT600 form is complicated if you're unfamiliar with corporate tax. If you carefully follow the directions and consult useful guides and guidance, the process will be as easy as it can be.

If your financial calculations are beyond your comfort zone, you could employ external accountants to handle the filing for them.

WHEN DO I FILE A TAX RETURN?

According to HMRC, the tax authority, you must file your tax return every 12 months after closing the accounting time. In most cases, your accounting time will reflect your business's financial year.

However, if your company is beginning its first year, then the duration of the period could vary slightly. It's also important to remember that if the accounting period exceeds 12 months in length, you could have to file two distinct tax returns.

HOW DO I PAY MY BILL?

When you've finished filing taxes, it's now time to think about how you can make your tax payment. There are several ways your business can pay its bill, so if your small-to-medium-sized enterprise (SME) doesn't currently handle online payments, you don't need to worry.

You can make your payment to HMRC by using;

● Online banking

● Telephone banking

● Direct debit

● Bankers Automated Clearing System (BACS)

● Clearing House Automated Payment Systems (CHAPS)

If you wish your payment to be process within the same day or the next day, utilize telephone or online banking such as online banking or CHAPS. In addition, your payment will be process within three days if you pay by BACS and direct debit.

WHEN SHOULD You  MAKE THE PAYMENT?

The tax deadline for corporations will differ from business to business. Like the filing of tax returns, the deadline for your company's particular deadline will depend on your accounting timeframe.

If your company's annual income is below PS1.5 million dollars, you must pay the corporation tax nine months in advance, and the day following, the accounting period has concluded.

If your accounting period is over at the beginning of January 2022, the tax deadline will fall on September 1st that same year. However, when your annual revenue exceeds PS1.5 million, you're legally required to pay your Corporation Tax electronically in more regular installments.

The same, as before, will be contingent upon how long the business's accounting period is. For example, if a company has an accounting period that is 12 months long, it will be require to pay taxes in four installments per month.