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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.
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:
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.
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