Getting crucial information for your corporate planning means you also need to know the official rates and allowances implemented by tax collection agencies. The official corporation tax rate for company profits from 1 April 2015 is 20%. You should work out your profits when preparing your company tax return, since the rate you pay on profits from before 1 April 2015 is based on profit size. Some expenses such as costs for entertaining clients are not counted for corporation tax, so add these back to your profits when preparing your company tax return.
Accounting Period Factors
If your accounting period is shorter than 12 months, the thresholds are reduced in line with your accounting period. This means that if your accounting period is 6 months, the £300,000 small profits threshold is halved to £150,000. If there's more than one rate which applies in your accounting period, you should work out how many days each rate applied and work out the tax due for each.
When preparing your company's financial account, you'll be able to deduct the costs of running your business from your profits before tax. Take note that anything you or your employees get personal use from must only be treated as a benefit. You can claim capital allowances when buying assets (e.g. equipment, machinery, vehicles) that you keep for carrying out your business operations. Make sure to factor these in during tax planning.
Aside from capital allowance, you can also make a claim for research and development (R&D) relief, the patent box (if your company makes a profit from patented inventions), reliefs for creative industries (if your company gains profit from theatre, film, television, animation or video games) or disincorporation relief (when your company is closing and becoming a sole trader). Additionally, the only companies who can claim marginal relief are those who had profits between £300,000 and £1.5 million that were gained before 1 April 2015 or from oil rights/extraction in the UK or UK continental shelf.
To get a complete and updated overview of the taxes in UK and from tax planning experts, talk to our team – we can also help keep your accounting process simple and your business’s financial information up to date.
"Corporation Tax rates and Reliefs". GOV.UK, 1 April 2015. Web. 15 April 2015.