Corporation tax in the UK is levied on the profits generated by UK resident companies and branches of overseas companies. These profits, typically derived from successful business operations, often fall within the limited liability company category.
In recent years, the Corporation Tax landscape has undergone significant changes. As of 1 April 2023, the main Corporation Tax rate has been increased to 25%, while a small profits rate of 19% applies to profits up to £50,000. This dual-rate system has introduced complexities in calculating the tax payable, including considerations of marginal relief and the effective utilisation of losses within group settings.
Furthermore, companies must now carefully navigate the definition of "associated companies" and its implications on tax liability. Various thresholds, such as the small profits threshold and those determining "large" or "very large" company status for tax instalment payments, are influenced by the number of associated companies. Determining associations can be intricate and demanding.
Another challenge for businesses is the long-standing requirement to file Corporation Tax returns with iXBRL-formatted accounts, often necessitating investment in specialized software for compliance.
Given the complexities involved, it's understandable why many businesses choose to entrust their Corporation Tax compliance to specialists and qualified experts, such as us here at Moore East Midlands. With a dedicated team specialising in these areas, we are well-equipped to provide expert guidance and support.
For further advice on any of the points covered in this article, please contact your usual Moore adviser.