What is corporation tax?

Published on 27 December 2022 at 22:11


Corporation tax is a tax that is paid by companies and organisations on their profits. It is one of the many taxes that businesses need to pay in order to operate legally in the UK. The amount of corporation tax that a business needs to pay is determined by the company's profits and the tax rate set by the government.


When it comes to calculating your corporation tax, it's important to remember that not all profits are subject to corporation tax. For example, capital gains are taxed separately, and there are certain types of income that are exempt from corporation tax. It's also important to note that there are different tax rates for different types of businesses, such as small or large companies, and for different types of profits, such as ring-fenced profits.



One of the ways to reduce your corporation tax bill is by claiming expenses. Many business expenses, such as staff costs, rent, and equipment, are tax-deductible. This means that the amount you can claim for these expenses will be subtracted from your profits, reducing the amount of corporation tax you need to pay.



Another way to reduce your corporation tax bill is by claiming tax reliefs. There are a number of different tax reliefs that businesses can claim, such as research and development tax relief, and capital allowances. These reliefs can significantly reduce the amount of corporation tax that a business needs to pay.



It's also important to keep in mind that you can only claim reliefs and expenses if you have the necessary documentation to support them. It's vital to keep accurate records of all your business income and expenses. This will ensure that you can claim all the reliefs and expenses that you are entitled to, and that you have the necessary evidence to support your claims.

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One more tip is to time your income and expenditure. It's important to time your income and expenses to take advantage of the current tax rate. For example, if you think the tax rate will increase next year, it may be beneficial to bring forward certain income or expenses to the current year, when the tax rate is lower.


It's essential to remember that corporation tax can be complex, and errors can be costly. As an expert LOYALS accountant, I recommend that you seek professional assistance to ensure accuracy and avoid any issues. Our team of experts can help you navigate the process, making sure your corporation tax is calculated correctly and on time. We can also help you to reduce your tax bill by claiming all the reliefs and expenses you are entitled to.



Don't hesitate to reach out to us with any questions you may have. We will be more than happy to help you with any issues or concerns you may have. Contact us today to learn more about how we can assist you and make the process as hassle-free as possible. Trust us to help you manage your corporation tax and save on your tax bill.

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