What is Corporation Tax liability?
Definition of Corporation Tax liability
Corporation Tax is a tax that limited companies, and some other organisations like clubs and societies, must pay to HMRC on their profits. A liability is the obligation to pay this tax.
Corporation Tax must be paid to HMRC by 9 months and 1 day after the company's accounting year end.
The company must also file a Corporation Tax return with HMRC, showing how much turnover (sales) it has made in the year, how much profit, and how the tax is worked out. This must also have a copy of the company's accounts attached.
The Corporation Tax return doesn't have to be filed until 12 months after the company's accounting year end - but because the tax has to be paid sooner than that, most Corporation Tax returns are filed early!
For example, a company that prepares accounts to 31st March each year must pay its Corporation Tax by 1st January the following year.
Forecasting your business's Corporation Tax bill
Using your day-to-day bookkeeping information, FreeAgent automatically forecasts your Corporation Tax bill. Simply add your bank statements, invoices and expenses as usual and FreeAgent will apply the correct corporation tax rate from HMRC.
Got questions? Ask Emily!
FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.