As a limited company in the UK, you are required to pay Corporation Tax on your taxable profits. Below is an example explaining how to account for Corporation Tax as a limited company that you can easily transpose to your business.
- A limited company registered on 18 Oct 2022
- Year 1 will run from the registration date through 31 Oct 2023
- Year 2 will start on 1 Nov 2023
- The calculation of the final tax bill for year 1 will happen once the period ends (31 Oct 2023)
- The company will have 9 months from the year 1 end date to file the tax return and pay the tax bill (by 31st July 2024)
Steps to take if you don’t have an accountant
- Calculate the tax amount to pay
- Create a bill with the amount to pay dated end of year 1 (31 October 2023) and categorised as ‘Corporation tax cost’
- Pay the tax and categorise the payment as ‘Corporation Tax liability'
- Match the bill you created to the tax payment
Steps to take if you have an accountant who has access to your data.
- Your accountant calculates the tax amount to pay
- Your accountant creates a journal dated end of the year 1 (31 October 2023) to:
- Debit Corporation tax cost
- Credit Corporation tax liability
- You pay the tax and categorise the payment as ‘Corporation Tax liability'