Corporation Tax UK: Definition, Tax Rates, How It Works
Corporation tax is a crucial aspect of financial management for businesses in the United Kingdom. This article aims to demystify the concept of corporation tax, providing a clear understanding of its purpose, who is obligated to pay it, the current tax rates, filing requirements, and the deadline for compliance. What is Corporation Tax? Corporation tax is a tax levied on the profits generated by limited companies and other corporate entities operating within the UK. Unlike other taxes, such as Value Added Tax (VAT) which is based on sales, corporation tax is based on a company’s profits. This tax plays a significant role in contributing to the national revenue and supporting public services. Who Needs to Pay Corporation Tax? Businesses subject to corporation tax include: Limited companies Foreign companies with a UK branch or office Clubs, societies, associations, and other unincorporated bodies that earn trading income It’s important to note that sole traders and partners