Corporation tax & VAT

What is Corporation Tax?

If you are running a limited company then you may need to pay Corporation Tax. Corporation Tax is a tax on your company's overall taxable profits.

There is a lot to know about Corporation Tax and many people choose to use an accountant to help them manage this. You can also get help with the basics at www.hmrc.gov.uk/ct  

It's your responsibility, even if you employ an accountant, to make sure all necessary tax returns are completed on time.

From April 2011, all Company Tax Returns must be filed online and you must pay your Corporation Tax and related payments such as interest or penalties electronically. If you file your return late, you may have to pay a penalty. If you pay your Corporation Tax late or don't pay enough, you'll be charged interest.

What is VAT?

VAT is a tax charged on most business-to-business and business-to-consumer transactions in the UK.

You must register for VAT if your turnover in any 12 month period is over a specific limit (this limit is normally increased annually in the Chancellor's Budget), or if you think your turnover may soon go over this limit. You may register voluntarily at any time.

Most VAT registration applications can be done online. For more information visit www.hmrc.gov.uk/vat/start/register/how-to-register.htm

Once registered for VAT, you need to fill in and submit regular VAT returns online, and pay any VAT due electronically.

From 1 April 2010, all new businesses registering for VAT on or after that date will have to submit their returns online and pay electronically any VAT that is due. HMRC provide full details on how to do this in the VAT registration pack which is sent out to all newly registering VAT customers.