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Corporation Tax

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Corporation Tax in the UK

The UK’s corporation tax rate of 19% is already the lowest in the major G7 economies and it is set to come down even further to 17 per cent by 2020, making the UK an attractive location for overseas companies. The UK has a large number of tax treaties agreed with over 100 countries and the policy has been to reduce withholding taxes on interest and royalties to zero in many cases.

At Axada, we understand the issues facing companies operating across international borders and offer advice on corporation tax planning issues, company structuring, application of tax reliefs, transfer pricing and capital allowances. The continually changing landscape of business tax can have unexpected tax effects, so tax planning advice should be considered an ongoing process. Keeping your tax affairs up to date is key to avoiding penalties. At Axada, we take care of filing your corporation tax returns, ensuring tax deductions are maximised to reduce the company’s tax liability and we will liaise with the tax office on your behalf.

We can help with:

Tax compliance
Tax advice
Tax enquiries and appeals
 Managing permanent establishment risk
Capital allowances
Transfer pricing compliance
Construction Industry Scheme
R&D credits

Corporation tax compliance for Limited Companies in the UK

Once a company has been registered at Companies House, it must register for corporation tax with the UK tax authority tax within 3 months of starting to trade. If the company is not trading it must register as dormant. HMRC will issue the company with their Unique Taxpayer Reference (UTR). Active companies need to pay corporation tax 9 months and 1 day after the end of each accounting period. Large companies will make corporation tax payments throughout the year. Each year an online corporation tax return must be filed 12 months after the end of the accounting period.

When are companies subject to corporation tax in the UK?

Companies that are resident in the United Kingdom pay corporation tax on their worldwide income in the UK. Non resident companies only pay tax on UK income and trading profits of their UK permanent establishments, subject to reliefs under double tax treaties.

What are the main corporate taxes in the UK?

Depending on their activities and transactions, companies can be subject to different types of corporate taxes. The main business taxes in the UK are:

Corporation Tax
Capital Gains Tax
Stamp Duties
Value added Tax (VAT)
Payroll taxes – National Insurance (PAYE)
Environmental taxes
How can a business optimise corporation tax?

The UK offers a range of tax incentive schemes. The development and exploitation of intellectual property (IP) and creative industries can benefit from these special reliefs and there are several others too. Often businesses are not aware of such schemes, or the other options of reducing their corporation tax. This is where planning for greater tax efficiency with the help of a professional advisor can make a big difference. Tax avoidance on the other hand has reputational and financial effects and minimisation of taxes should always be considered carefully.

Corporation Tax Advisory Services

We offer specialised advice on the tax areas that are relevant to internationally expanding companies. This will normally include advising on the most tax efficient structure, identifying and minimising key tax risks, advising on and agreeing Advance Pricing Agreements (APA) with the UK tax authorities and ensuring that full use is made of tax incentives and tax deductions. We can advise on asset purchases and disposals and structuring transaction to ensure tax efficiency is maximised.

The costs of corporate tax return preparation

The costs of assisting businesses with their tax compliance will depend on how complicated their tax affairs are. We would be pleased to provide you with a free quotation.

Are there any regional variations on the rates of corporation tax in the UK?

Currently, there are no variations on the main rates of tax within the UK, however local taxes can vary between regions.

Frequently Asked Questions

  • Can you handle producing and filing the end of year employee benefit reconciliations?

    Yes, we offer this service as part of our general payroll services.

  • If my UK company is controlled from outside the UK, do I need to pay UK corporation tax ?

    Companies incorporated in the UK are automatically treated as resident in the UK for tax purposes. Exceptions can apply where a company is treated as resident outside the UK by way of a double tax treaty. Often tax treaties will refer to where the “effective management” is. This concept is based around where board meetings and decisions at the highest level are carried out. If this is outside the UK, the company may be treated as non resident. It is a very technical area of tax and usually requires careful consideration of the facts.

  • What is the construction industry scheme (CIS)?

    The scheme affects companies and subcontractors working in the construction sector. It covers structural or civil engineering work on roads and bridges and work carried out on a permanent or temporary building. Not all construction activities are included and architecture, carpet fitting and scaffolding, for example, are excluded from the scheme.

    The construction industry scheme is similar to PAYE for employees in that it withholds tax from payments made by contractors to subcontractors.

    Under the CIS Scheme, contractors deduct money from a subcontractor’s payments and pass it to HM Revenue and Customs (HMRC). These deductions count as advance payments towards the subcontractor’s tax liability. Contractors must register for the scheme. Subcontractors don’t have to register, but deductions are taken from their payments at a higher rate if they are not registered. Large companies working as subcontractors can apply for “gross payments status”, which exempts their payments from such deductions.

  • What is the Construction Industry Training Board (CITB) levy?

    The Industrial Training Act specifies that all employers in the construction industry must register with the CITB and complete an annual levy return. Many international construction companies are not aware of this requirement and fail to complete returns on time.

    The levy funds that are collected from employers are reinvested into the industry by providing funding for training and thereby ensuring that standards and safety are continually improved. Employers registered with the CITB can access grants and funding and other support services each year.

    We help new companies with their CITB registration and take care of completing the annual returns, ensuring that they can access their full funding entitlements each year.

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