As a contractor, operating via through limited company can be a very effective way of earning a living. If it is run as a profitable business, you will still need to pay the government it's dues, however, Corporation Tax rates are lower than personal tax rates. A limited company provides a more tax-efficient structure than full-time employment or umbrella arrangements.
A limited company pays Corporation Tax on:
- Profits from trading and investment (except dividend income, which is taxed differently)
- Capital gains
We can help you structure your earnings efficiently, making use of the advantages that limited companies and Corporation Tax offer.
Need help with limited company tax? Contact our consultants.
In the UK, Corporation Tax goes hand-in-hand with annual statutory accounts, which must be produced and submitted to HM Revenue & Customs (HMRC). Each company’s financial year is determined by the company directors.
As an example, a company may choose to align its financial year or accounting period with the UK tax year, which ends on 5 April every year. For all intents and purposes this would be 31 March.
To simplify this, the company must produce accounts and a Corporation Tax return for a 12 month period.