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Understanding Accounting Periods for Corporation Tax

Tax_TaxAgility Accountants LondonUnderstanding your accounting period in terms of the Corporation Tax your company has to pay is essential in ensuring you pay on time, every time.

Everything we’re going to touch upon below can be accomplished by your accountant, though in several instances they’ll need input from you in order to make sure all dates and monetary figures line up. If you’ve yet to hire an accountant, or you wish to seek some advice about your accounting period from an outside professional, our contact details are at the bottom of this article.

Your Accounting Periods for Corporation Tax

In the majority of cases your accounting period for Corporation Tax will be be twelve months long, and should start and end in parallel with your company’s financial year; which for the majority of companies (unless you specifically chose for this to be different) is aligned with the tax year: starting on 6 April and ending on 5 April each year.

If you’re unsure of your accounting period for Corporation Tax, you or your accountant can log into HM Revenue and Customs (HMRC) online services, under which you’ll be able to locate these dates.

Shorter Accounting Periods

It’s possible, through no fault of your own, that your accounting period for Corporation Tax is shorter than the standard twelve months.

The typical reasons why this may be the case is because you completed your first accounts period in business (which may be less than twelve months), you recently restarted your business, or you chose to shorten your financial year.

In this situation you (or your accountant) will likely have to send more than one company tax return, though this will vary between companies. Although it’s possible to read about the specifics yourself, your accountant will have significantly greater experience in this area, and should at least be consulted of your plans, as they’ll likely have the knowledge needed to speed this process along.

Longer Accounting Periods

Though it’s not possible for your accounting period to last longer than twelve months, it is possible for your accounts to cover a longer period, therefore even though your accounts will be seen as one continual period, your accounting period for Corporation Tax will be divided into two periods; one that’s twelve months long, and one consisting of the remaining time.

Of course, if you stop trading at any point during your accounts, your accounting period will be split in half anyway, with you (or your accountant) having to complete a Company Tax Return for both periods.

Corporation Tax Cut to 20%

From 1 April 2015 Corporation Tax was cut to 20%, making it the lowest in the entire G20, and the largest reduction in Corporation Tax ever brought into effect in a single parliament. It is, of course, impossible to predict whether this reduction will remain in place.

Experienced Accounting Professionals

To speak with a professional to discuss your accounting periods for Corporation Tax purposes, contact us today on 020 8780 2349 or get in touch with us via our contact page to arrange a complimentary, no obligation meeting.

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