register a company in the uk

How and When to Register for Corporation Tax with HMRC

by | Aug 25, 2024 | Business, Companies House

register for corporation tax in the uk

If you’ve recently started a limited company in the UK, one of your key responsibilities is to How and When to Register for Corporation Tax with HMRC. Corporation Tax is a tax on the profits your company makes, and it’s mandatory for all UK limited companies to report and pay this tax. This guide will explain how and when to register for Corporation Tax, along with important deadlines and steps to ensure you remain compliant with UK tax laws.

What is Corporation Tax?

Corporation Tax is a tax that UK companies pay on their profits. This includes profits from trading, investments, and the sale of assets. The current Corporation Tax rate is 19%, although this may change depending on government policies.

Who Needs to Register for Corporation Tax with HMRC?

You must register for Corporation Tax if you:

  • Set up a limited company that’s active (i.e., trading).
  • Take over an existing business as a limited company.
  • Start receiving income as a limited company, even if it’s from non-trading activities.

Important Note: If your company is dormant (not trading), you don’t need to register for Corporation Tax with HMRC until it becomes active.

When to Register for Corporation Tax

You must register your company for Corporation Tax within three months of starting to do business. “Starting to do business” can include any of the following activities:

  • Buying, selling, or leasing property.
  • Advertising your products or services.
  • Employing staff.
  • Earning interest from investments or other income sources.

Key Deadline

You must register for Corporation Tax with HMRC within three months of your company becoming active. Missing this deadline can result in penalties from HMRC.

How to Register for Corporation Tax

Registering for Corporation Tax is a straightforward process that can be completed online. Here’s a step-by-step guide:

Step 1: Prepare the Required Information

Before you start the registration process, make sure you have the following information ready:

  • Your company’s unique 10-digit Company Registration Number (CRN), which you receive from Companies House.
  • The date your company started trading.
  • Your company’s accounting period start date, which is usually the date you incorporated the company.

Step 2: Set Up a Government Gateway Account

To register for Corporation Tax with HMRC, you need a Government Gateway user ID and password. If you don’t already have one:

  1. Visit the Government Gateway website: Create a Government Gateway account.
  2. Follow the prompts to create an account: You’ll need to provide basic information about yourself and your company.

Step 3: Register for Corporation Tax Online

Once you have a Government Gateway account, you can register your company for Corporation Tax:

  1. Log in to your Government Gateway account.
  2. Navigate to the Corporation Tax registration page: This can be accessed through the HMRC online services portal.
  3. Provide your company details: Enter your Company Registration Number (CRN), the date you started trading, and your company’s accounting period.
  4. Submit your registration: After filling out the form, review your details and submit the registration.

Step 4: Receive Your Unique Taxpayer Reference (UTR)

Once you’ve registered for Corporation Tax, HMRC will send you a 10-digit Unique Taxpayer Reference (UTR) by post, usually within a few days. This UTR is essential for filing your company’s tax returns and for any correspondence with HMRC.

What Happens After Registration?

1. File Your Company Tax Return

  • After your company’s financial year ends, you must file a Company Tax Return (CT600) with HMRC. This return details your company’s income, expenses, and the amount of Corporation Tax you owe.
  • You must file your Company Tax Return within 12 months after the end of your company’s accounting period, even if you don’t owe any tax.

2. Pay Your Corporation Tax

  • Corporation Tax payment is due 9 months and 1 day after the end of your company’s accounting period. For example, if your financial year ends on 31 March, the payment deadline is 1 January of the following year.
  • You can pay your Corporation Tax online via bank transfer, Direct Debit, or using a corporate credit card.

3. Maintain Accurate Records

  • Keep detailed records of all income, expenses, and transactions. HMRC requires you to keep these records for at least six years.

Penalties for Failing to Register

Failing to register for Corporation Tax on time can result in penalties. HMRC may charge you:

  • A penalty for late registration.
  • Additional fines if you fail to file your Company Tax Return on time.
  • Interest on any unpaid Corporation Tax.

Conclusion

Registering for Corporation Tax is a critical step in setting up a limited company in the UK. It’s essential to complete the registration within three months of starting your business activities to avoid penalties. The process is straightforward and can be completed online through the Government Gateway. Once registered, ensure you stay compliant by filing your Company Tax Returns on time and paying any Corporation Tax due. By following these steps, you’ll ensure your business meets its tax obligations and avoid unnecessary fines.