Companies House and Corporation Tax

This article provides an overview of both, Companies House and Corporation Tax as these two go together. Companies are incorporated first, and then they become liable for Corporation Tax with all the additional obligations this implies.

Companies House

By law, all businesses in the United Kingdom that are incorporated must be registered.

Companies House is the Registrar of Companies for England and Wales and is based at Companies House in Cardiff. The Registrar of Companies for Scotland is based in Edinburgh, and that for Northern Ireland is in Belfast.

The main role of Companies House is to:

• register limited companies, that is to incorporate and dissolve them;
• examine company information delivered under the Companies Act 2006 and related legislation, and make sure that it is properly completed and signed;
• store this information, and
• make it available to the public.

Under the Companies Act 2006, all incorporated businesses, whether they are trading or not, have a duty to file their financial statements with Companies House. These financial statements summarise their financial performance and activities for the financial year.

Normally, financial statements have to be delivered to Companies House:

• 9 months from the accounting reference date for a private company or
• 6 months from the accounting reference date for a public company.

Deadlines for delivery are calculated to the exact day, and any delay automatically triggers a penalty.

Companies filing their first financial statements and those covering a period of more than 12 months, must be delivered:

• within 21 months of the date of incorporation for private companies, or
• within 18 months of the date of incorporation for public companies, or
• 3 months from the accounting reference date, whichever is longer.

Corporation Tax

Companies registered with Companies House also have to register with HMRC and pay Corporation Tax, which is paid on trading profits, profits made from company fund investment and from capital gains.

Corporation tax rates can go up as well as down. In the current economic climate, they are falling.

Corporation tax rates

2024

• 19% for profits not exceeding £50,000 (Small Profits Rate)
• 25% for profits exceeding £250,000 (Main Rate)

2023

• 19% for profits not exceeding £300,000 (Small Profits Rate)
• 25% for profits exceeding 300,000 (Main Rate)

Companies can claim ‘Marginal Relief’ on profits between the upper limit of the Small Profits Rate, and the Marginal Relief upper limit, which currently is £250,000.

Marginal Relief provides a sliding scale rate of Corporation Tax for companies whose profits are between these two limits. Those companies, who are able to claim Marginal Relief, effectively pay less Corporation Tax (for details see HMRC - Who can claim Marginal Relief? ). You’ll find the HMRC Marginal Relief Calculator here.

For companies whose financial year straddles two different tax rates, the two different tax rates will be charged on the respective parts of their profits.

Corporation tax payment must be made within nine months of the end of the accounting period. However, the corporation tax return itself must be filed within 12 months, which means it can be filed after tax has been paid.

Given the complications around corporation tax, using the services of a properly qualified account is highly advisable to ensure that legal requirements are complied with in a timely manner and that all allowances and deductions are taken into account.

For further information on incorporating your company and on all questions concerning corporation tax, Book a call with us at https://www.dnsassociates.co.uk/free-consultation.

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.