Before you can pay corporation tax, you usually need to work on your company tax return.
While the deadlines for paying your corporation tax and filing a company tax return are different, in practice they’re often done at the same time. This is because you usually need to complete a company tax return (also known as form CT600) to know whether there’s a corporation tax bill to pay.
While it’s possible to complete the return yourself, lots of companies choose to enlist the services of an accountant to help them out.
Here’s what small business owners should know about filing a company tax return and paying corporation tax – but use this as a guide only, and make sure you seek professional advice if you’re unsure of anything.
In this article, we’ll cover the following:
- What is a company tax return?
- When to file your company tax return
- Limited company tax return example
- What is a CT600?
- Late company tax return penalties
- How to pay your HMRC corporation tax bill
- What are the penalties for paying your corporation tax late?
What is a company tax return?
A company tax return is used to report your spending, profits, and corporation tax due to HMRC. It involves completing a CT600 form and submitting a financial report with calculations that show how much you owe in tax.
Our guide to corporation tax has more on when to pay and how to register.
When to file your company tax return
You need to file one of these if your company gets a ‘notice to deliver a company tax return’ from HMRC.
Keep in mind that even if your company has made a loss, or if you have no corporation tax to pay, you still need to file.
The deadline for filing is 12 months after the end of the accounting period the return covers. Your accounting period is normally the same as the financial year covered by your company’s annual accounts – but it might be different in some circumstances, for example your first year of trading. In that situation, you’d need to send two corporate tax returns to cover your first year.
If you’re not sure when the end of your accounting period was, you can sign in to your HMRC business tax account to check.
Limited company tax return example
For example, if you start your business on 15 January 2024, Companies House will set your financial year to end on 31 January 2025.
This means you’ll need to file two tax returns in your first year. One to cover the first 17 days and one to cover the following 12 months.
After your first year of trading, your accounting period will run from 1 February to 31 January.
A company tax return should show:
- your company’s profit or loss for corporation tax (which isn’t the same as profit or loss shown in your annual accounts)
- your corporation tax bill
You can file your accounts with Companies House and your corporate tax return with HMRC at the same time if your limited company doesn’t need an auditor. You can file these online (you can’t use the paper CT600 form unless you have a reasonable excuse or you want to file in Welsh).
Most small companies won’t need an audit – HMRC say they generally only need one if it says they do in their articles of association, or their shareholders ask for one.
What is a CT600?
The company tax return is also called form CT600. It’ll include standard company information, but you also need to do some complex calculations. Depending on your company these include calculations like:
- turnover
- income (including profits, trading losses brought forward, property income)
- chargeable gains
- profits before other deductions and reliefs
- deductions and reliefs
- tax reliefs and reductions
- tax reconciliation
- losses
The accounts and computations part of the limited company tax return must be in the Inline eXtensible Business Reporting Language (iXBRL) format.
Because filing the return is complex, HMRC publish this CT600 Guide to help small business owners.
You should check that out for more information, and again, keep in mind that many limited companies get professional help from tax advisers and accountants when preparing their return.
Late company tax return penalties
As you might expect, there are fines for filing late.
How late is your return? | Penalty |
|---|---|
One day late | £100 |
Three months late | A further £100 |
Six months late | HMRC will estimate your corporation tax bill and add 10 per cent of the bill as a penalty |
12 months late | Another 10 per cent of the tax liability |
How to pay your HMRC corporation tax bill
The deadline for paying your corporation tax bill (for companies with taxable profits of up to £1.5 million) is nine months and one day after the end of your accounting period.
You can pay by:
- online or telephone banking and CHAPS (same day or next day)
- Bacs, Direct Debit (if you’ve already set one up), online with a debit or corporate credit card, at your bank or building society (three working days)
- Direct Debit, if you’ve not set one up before (five working days)
You can pay corporation tax on the government website.
What are the penalties for paying your corporation tax late?
If you don’t pay on time, HMRC say that they’ll charge you interest on a daily basis. This starts from the day after you should’ve paid and continues until you eventually pay it.
HMRC say that late payment interest is actually tax deductible for corporation tax purposes, which “means you can include this expense in your company accounts for the accounting period (or periods) when the interest was incurred.”
Is there anything else you’d like to know about filing your limited company tax return? Let us know in the comments below.
More tax guides and tips for small businesses
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