Corporation tax is the UK term for the tax levied on company profits. The main rate is 25%, with a reduced rate of 19% for companies with profits under GBP 50,000.
Corporation tax is calculated on a company's taxable profits for the accounting period. In the UK, the main rate is 25% for companies with profits over GBP 250,000. Companies with profits under GBP 50,000 pay the small profits rate of 19%. Those between GBP 50,000 and GBP 250,000 pay a marginal rate. Companies must register with HMRC for corporation tax within three months of starting to trade. The corporation tax return must be filed within 12 months of the accounting period end, and payment is due 9 months and one day after the period end. Large companies may need to pay quarterly instalment payments. Calculating corporation tax involves adjusting accounting profit for tax purposes - adding back non-deductible expenses and deducting capital allowances. SortBooks maintains accurate profit calculations in Xero by correctly categorising all revenue and expenses, providing your accountant with reliable data for corporation tax return preparation.
SortBooks automates the bookkeeping processes related to corporation tax by connecting to your Xero account and using AI to categorise transactions, reconcile bank feeds and generate accurate reports. Instead of manually managing corporation tax, SortBooks handles it automatically with 97%+ accuracy - saving you hours every week and ensuring your books are always up to date and compliant.
Company tax (or corporation tax) is the tax levied on a company's taxable income. Rates vary by country and sometimes by company size.
HMRC is the UK's tax authority responsible for collecting taxes, administering benefits, enforcing customs regulations and overseeing Making Tax Digital.
A tax return is the formal document lodged with your tax authority reporting your income, deductions and tax payable for a specific period, usually annually.
Taxable income is your total assessable income minus all allowable deductions. It is the amount on which your income tax is calculated.
In bookkeeping, compliance refers to meeting all legal and regulatory requirements for financial record keeping, tax reporting and lodgement obligations set by your tax authority.
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