C Corporation Tax in UK
You must pay Corporation Tax on profits from doing business as:
- a limited company
- any foreign company with a UK branch or office
- a club, co-operative or other unincorporated association, eg a community group or sports club
You don’t get a bill for Corporation Tax. There are specific things you must do to work out, pay and report your tax.
- Register for Corporation Tax when you start doing business or restart a dormant business. Unincorporated associations must write to HMRC.
- Keep accounting records and prepare a Company Tax Return to work out how much Corporation Tax to pay.
- Pay Corporation Tax or report if you have nothing to pay by your deadline – this is usually 9 months and 1 day after the end of your ‘accounting period’.
- File your Company Tax Return by your deadline – this is usually 12 months after the end of your accounting period.
Your accounting period is normally the same 12 months as the financial year covered by your annual accounts.
Profits you Pay Corporation Tax on
Taxable profits for Corporation Tax include the money your company or association makes from:
- doing business (‘trading profits’)
- selling assets for more than they cost (‘chargeable gains’)
If your company is based in the UK, it pays Corporation Tax on all its profits from the UK and abroad.
If your company isn’t based in the UK but has an office or branch here, it only pays Corporation Tax on profits from its UK activities.
Stopping or restarting business
Check what you have to do if:
If you need help with Corporation Tax, you can:
- appoint an accountant or tax adviser to help you – you can find an accountant accredited in the UK
- contact the helpline
The Corporation Tax rate for company profits is 19%
You will pay Corporation Tax at the rates that applied in your company’s accounting period for Corporation Tax.
There are different rates for ‘ring fence’ profits of companies involved in oil rights or extraction in the UK or UK continental shelf.
You may be able to get deductions or claim tax credits on your Corporation Tax. These are known as reliefs.
- Research and Development (R&D) Relief
- The Patent Box if your company makes a profit from patented inventions
- reliefs for creative industries (CITR) if your company makes a profit from theatre, film, television, animation or video games
- Disincorporation Relief if you’re closing your company and becoming a sole trader, ordinary business partnership or limited partnership
- terminal, capital and property income losses
- trading losses
The rate you pay on profits from before 1 April 2016 depends on the size of your profits.
Work out your profits when you prepare your Company Tax Return.
If more than one rate applies in your accounting period
Work out how many days each rate applied, then work out the tax due for each.
For example, if your accounting period is 1 January 2017 to 31 December 2017 you pay:
- the rate for the financial year starting 1 April 2016 for 90 days (1 January 2017 to 31 March 2017)
- the rate for the financial year starting 1 April 2017 for 275 days (1 April 2017 to 31 December 2017)
C Corporate Tax in USA
Corporate tax is imposed in the United States at the federal, most state, and some local levels on the income of entities treated for tax purposes as corporations. Since January 1, 2018, the nominal federal corporate tax rate in the United States of America is a flat 21% due to the passage of the Tax Cuts and Jobs Act of 2017. State and local taxes and rules vary by jurisdiction, though many are based on federal concepts and definitions. Taxable income may differ from book income both as to timing of income and tax deductions and as to what is taxable. The corporate Alternative Minimum Tax was also eliminated by the 2017 reform, but some states have alternative taxes. Like individuals, corporations must file tax returns every year. They must make quarterly estimated tax payments. Groups of corporations controlled by the same owners may file a consolidated return.
Blended Tax Calculation for 2018 Filing
If your corporation’s tax year began before January 1, 2018 and it ended after December 31, 2017, you will need to figure and apportion your tax amount by blending the rates in effect before January 1, 2018, with the rate in effect after December 31, 2017.
U.S. Corporation Tax Rate through 2017
This information is for corporate tax rates through the 2017 tax year. It is common to say that the U.S. corporate tax rate through 2017 was 35%, but the rate varied from 15% to 35%, depending on the amount of corporate income subject to tax for the year.
Corporate Tax Rate Schedule (2005 through 2017)
If taxable income (line 30, Form 1120) on page 1 is
Corporate Taxes on Dividends
Shareholders are not taxed individually for this corporate tax, but they pay tax on dividends they receive. Dividends are taxed only when they are received. The tax on dividends is determined by the number of shares owned and the type of dividends. Dividend income for a tax year is reported on the shareholder’s personal tax return on Schedule D – Capital Gains and Losses, and this income is included with other income.
The profit of a corporation is taxed to the corporation when it is earned and then is taxed to the shareholders when distributed as dividends. This creates a double tax. In the example above, the corporation itself pays $100,500 in tax on $300,000 in earnings. If the corporation distributes all or part of that income to shareholders as dividends, the individual shareholders must report this income on their individual tax returns. By the way, dividends are taxed at a special dividend tax rate. (If the corporation pays an owner back for an investment in the company, this is considered a return of capital investment, and it’s not considered a dividend and is not taxable.)
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