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UK Companies Taxation

Companies taxation in the UK takes various forms. Corporation Tax is a tax levied on profits made by a Company. Value Added Tax (VAT) is a tax levied on goods and services provided in the UK. As an employer you would also be liable to National Insurance Contributions (NICs) and Pay as You Earn (PAYE). UK Companies taxes may also be liable to Capital Gains taxes (for example, on sales of assets), Stamp Duty (i.e. on transfer of shares), Excise Duties, etc.

What is Corporation Tax?

UK Companies are subject to Corporation Tax at the rate of 20% for annual profits under £300,000 and 24% for annual profits over £300,000. This rate will then be reduced by a further 1% in each of the following two years and will be set at 22% from April 2014.

Company taxation computation is submitted through a tax return. The company is required to submit accounts, tax return and pay tax 9 months and 1 day after the end of the accounting period. Penalties are charged if a UK companies taxes are late.

Limited Company Tax Registration

Within 3 months of your limited company incorporation you will need to notify HM Revenue & Customs of your company’s trade commencement date.

Value Added Tax

If your company is expected to have a taxable turnover exceeding £79,000 (2012), you would also need to register for VAT, although it can be done voluntary.

LLP Taxation

UK LLP Taxation is significantly different from UK limited company taxation. LLP taxation is paid by its members and is not subject to company Corporation Tax. LLP members only pay Income Tax on profits they make in one fiscal year, which runs from April 6th until April 5th of the following year. It is possible that non-UK resident members of a Limited Liability Partnership with no profits derived from trading in the UK may not pay any Income Tax in the UK.

Apart from UK company taxes, as the owner or member of UK companies, you need to be aware that the date to file your Company Annual return with Companies House is within 28 days of the anniversary of your company formation.

UK Companies Limited is a company formations agent and is not providing advice on company’s taxation in the UK. We would always recommend seeking professional tax and accounting advice on all UK taxation. We can recommend a practice for you in the UK who would be able to explain how company taxation in UK works and would help to meet your tax obligations in the UK as well as prepare your financial statements. Company tax in the UK is very complex and needs to be provided by competent tax professionals.

by Elena Genovese