What Companies Need To Know For Corporate Tax Return In London

By Author: Stuart Spindlow
Total Articles: 12
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The United Kingdom offers an attractive system for businesses. As indicated on its official site, “At Summer Budget 2015, the government announced legislation setting the Corporation Tax main rate (for all profits except ring fence profits) at 19% for the years starting the 1 April 2017, 2018 and 2019 and at 18% for the year starting 1 April 2020. At Budget 2016, the government announced a further reduction to the Corporation Tax main rate (for all profits except ring fence profits) for the year starting 1 April 2020, setting the rate at 17%.” This article aims at summarizing the main points of corporate tax return in London.

The tax system

All companies resident in the United Kingdom are subject to corporation tax on their profits, including capital gains. These are indexed to take full account of inflation. A company is resident in the United Kingdom (UK resident) if it is incorporated in it or if its central management and control are exercised there. Where a corporation pays taxes on income earned abroad, it is subject to United Kingdom tax on such income, but it receives a tax credit corresponding ...
... to tax paid abroad, Double taxation agreements exist between the two countries. This is the case between France and the United Kingdom. If the company is related to other companies in the UK or elsewhere, the profit limits are divided by the total number of related companies. For example, you are setting up a business in the UK (and establishing your headquarters in a commercial address in London). However, your business activity does not take place physically in England, but in France. In this case, you will have to pay the tax on French companies (33.33%). If you make less than 411,612 Euros in profits, the British government will grant you a tax credit of 15% since the tax would be 21% (36% - 21%). It must be remembered that any profit realized on the French soil is subject to French taxation, but, with the advantages that we have just evoked.

Advance Tax

When a company pays a dividend other than a Foreign Income Dividend (FID), it also pays the Advance Corporation Tax ACT to the tax authorities. If this ACT can in no way be deducted from the tax payable by the company for the financial year concerned, it may be deferred and deducted from the taxes due for the previous six fiscal years. It may also be carried forward to future periods. At present, ACT is payable at the rate of 25% of the dividend. This is important to keep in mind when doing your corporate tax return in London.