Corporation tax return deadline is approaching
If you own a limited company or you’re responsible for managing its finances, you need to be aware of the upcoming deadline for submitting your corporation tax return for the year ended 30th September 2022.
The deadline for payment is on 1 July 2023, and it is vital that you comply with it to avoid incurring penalties and interest from HM Revenue & Customs (HMRC).
The filing deadline for a corporation tax return (CT600) is 12 months from the period end. So, for the year ending 30th September 2022, you have until 30th September 2023 to file the return however HMRC will apply late payment interest even when you file the tax return after the payment due date.
In this article, we’ll discuss the importance of paying your corporation tax on time and how it can affect your business’s finances.
What is corporation tax?
Corporation tax is a tax that limited companies must pay on any profits they make during their accountancy period. It is calculated before dividends are paid to shareholders. In other words, it is the tax that a company must pay on its profits before distributing them as dividends. It applies to all UK-registered limited companies, including those that are dormant, small, or large.
The importance of paying corporation tax on time
The penalty for late payment of corporation tax can be significant, depending on how long you delay in submitting your payment. If you fail to submit your payment on time, you’ll face a financial penalty, which accumulates the longer you delay the payment.
The interest rate on unpaid corporation tax is currently 2.5%. Repayment interest, set at base rate minus 1%, with a lower limit of 0.5% – the ‘minimum floor’.
You risk incurring additional costs if you don’t submit your corporation tax on time.
The benefits of paying corporation tax early
One of the benefits of paying your corporation tax early is that HMRC will pay interest on the amount paid, provided you pay within six months and 13 days after the start of your accounting period.
The current interest rate is 0.5%, which is a substantial return on your investment if you make your payment on time. Nevertheless, it would be best to keep in mind that this interest is taxable and should be recorded in the company’s accounts.
What happens if you delay your corporation tax payment
If you fail to submit your corporation tax payment on time, you will be required to pay a financial penalty, which accrues based on the number of days you’re late with the submission. The penalty rate varies depending on how late you are, and the more delayed you are, the more significant the penalty becomes. You could also face possible legal action and further fines if you continue to ignore reminders or requests to pay.
How we can help your business
Ensuring that you submit your corporation tax payment on time is critical to maintaining a robust financial profile for your business. It helps avoid financial penalties, reduces legal stress, and ensures that you don’t incur any additional costs.
Whether you’re a new or existing client, we can assist you in adhering to the submission guidelines.
At McKenzies Chartered Accountants, we have a team of professionals that can help you calculate your corporation tax liability and assist with the submission process, ensuring that you do not submit late or potentially face any financial penalties or legal action.
Get in touch to chat with us about our accounting services and how we can help with your tax planning.