From 1 April 2015, the main rate of corporation tax is 20% and will continue the same for the Financial Year beginning on 1 April 2016. The main rate of corporation tax will then be reduced as follows:
- 19% for the Financial Years beginning on 1 April 2017, 1 April 2018 and 1 April 2019
- 17% for the Financial Year beginning on 1 April 2020.
Self assessment
Under the self assessment regime most companies must pay their tax liabilities nine months and one day after the year end.
If your company’s profits for an accounting period are at an annual rate of more than £1.5 million, you must normally pay your Corporation Tax for that period electronically, in quarterly instalments. If your company has a 12-month accounting period, you’ll have to pay in 4 equal instalments due:
- 6 months and 13 days after the first day of the accounting period
- 3 months after the first instalment
- 3 months after the second instalment (14 days after the last day of the accounting period)
- 3 months and 14 days after the last day of the accounting period
Corporation tax returns must be submitted within twelve months of the year end and are required to be submitted electronically. In cases of delay or inaccuracies interest and penalties will be charged.
Capital Gains
Companies are chargeable to corporation tax on their capital gains less allowable capital losses.
Indexation allowance
An indexation allowance is given, in order to counteract the effects of inflation inherent in the calculation of a capital gain. However, the allowance is not allowed to increase or create a capital loss.
Disposals planning
You should consider the timing of any chargeable disposals to ensure where possible advantage is taken of minimising the tax. Depending on circumstances this could be achieved by accelerating or delaying sales. You should also consider the availability of losses or the feasibility of rollover relief.
New assets purchase
If the sale proceeds are reinvested in a replacement asset, it may be possible to avoid a capital gain being charged to tax.
Only certain trading tangible assets qualify for relief. And the replacement asset must be acquired in the four-year period beginning one year before the disposal.