What do I need to do to complete a company tax return?

Your first concern, if you have your own limited company, is likely to be how much money you’re making from the business, but regardless of whether your focus is on business growth or business survival, a universal second priority is your company taxes. Completing a company tax return is one of the main legal responsibilities you must comply with, so getting it done, getting it done on time, and getting it done right so you’re not paying more tax than you need to are essential factors to be clear on. This article will help you navigate completing your company tax return and provide a comprehensive reference guide on everything you need to know about paying tax for your limited company.

What is a limited company tax return?

A company tax return is often commonly referred to as the CT600 which is the reference name of the form that needs to be filled in for HMRC. The form must be submitted to HMRC alongside various other financial documents and it reports your company’s earnings for its financial year. The main purpose of completing a company tax return is to declare your company’s profits (or losses) in order to be able to tell HMRC how much corporation tax is due to be paid.

Who needs to file a company tax return?

Only limited companies are required to file a company tax return. If you run a business as a sole trader or partnership, then you will need to complete a self-assessment tax return instead. It is the directors of the limited company who must deliver a company tax return. Actively trading companies will usually file annually, whereas dormant companies do not need to unless specifically requested by HMRC. If that is the case, they will receive a ‘Notice to deliver a Company Tax Return’ (form CT603) and become legally obliged to complete one by the deadline.

Is my company tax return the same as my annual accounts?

No, your company tax return and annual accounts are not the same thing! Many company owners get this confused and mistakenly believe these are the same requirements, but it is imperative that you are clear on the differences and their deadlines.

Full statutory accounts (annual accounts) are a required financial document which must be presented alongside your company tax return to HMRC. This is due by 12 months after the end of your company’s accounting period. However, depending on the size of your company, you are also obliged to provide full or abridged (a simplified version) accounts to Companies House. For your first accounts this is due 21 months after the date of your company formation and then from every year after, 9 months after the end of your company’s financial year. Your annual accounts therefore make up *part* of your corporation tax return but are also a separate requirement for Companies House.

What do I need to do for my company tax return?

The first thing you must do to be able to file your company tax return is to register for corporation tax with HMRC. Ideally, you would have made sure to have done this within the 3 months of when you first began trading through your limited company because you can face penalties for registering late. When you do this, HMRC will send you a UTR (unique tax reference) number for corporation tax purposes. Do not confuse this with your personal UTR number which you use to complete a self-assessment tax return for income tax purposes.

During the year, it is important that you keep and maintain accurate and organised records of your expenses and income. You’ll need this information when it comes to calculating your corporation tax liability after your accounting period has ended.

Your accounting period (also called your accounting reference date) is automatically set when you first set up a limited company with Companies House. It will be set as the last day of the month in which you registered. So, for example, if you registered with Companies House on 1 March 2024, your accounting period will end on 31 March 2025 (and this will be your financial year end date).

Watch out – when completing your company tax return your accounting period can only cover 12 months; this will mean that you will need to file two company tax returns for the first year. In proceeding years, your accounting period will simply be 1 April – 31 March annually (therefore covering 12 months and only needing only one tax return).

Your company tax return comprises of three keys parts which need to be submitted together. The information you need to include comprises:

1)       The CT600 – the form which was once a paper form that needed to be sent in to HMRC has now been replaced by a digital form that is submitted direct to HMRC through an online portal.
2)       Tax computations – this file shows how your figures which are entered onto the CT600 form have been calculated.
3)       Company accounts – these are made up of a Profit and Loss (income) Statement and a Balance Sheet. These should be presented following the relevant accounting standards applicable depending on the size of your company.

You can file your company tax return and annual accounts with Companies House at the same time using HMRC’s online service.

How do I complete a company tax return?

The CT600 is an extensive form which is certainly off-putting to most people. For that reason, you may choose to appoint one of our accountants to support you so that you can be certain you are filling it in correctly and save yourself time so that you can focus on running your business. HMRC provides a comprehensive guide, however we’ve also provided a summarised article of the key sections on how to file a company tax return which is applicable to most small to medium-sized companies.

How do I calculate how much I need to pay?

To calculate the amount of tax you’ll need to pay, you must first calculate your taxable profits. To do this you would total your income for the accounting period and deduct all allowable expenses. Then you will need to apply the correct corporation tax rate. The main corporation tax rate is 25% which is applicable to companies with profits of £250,000 or more a year. The small profits rate is 19% and applies to those companies with profits of no more than £50,000 a year. If your company profits are between £50,001 and £249,999 then you will be eligible to claim marginal relief. For more information you can refer to our article on how to calculate corporation tax and apply marginal relief.

Do I still have to do a company tax return if I’ve made a loss?

If in a tax year your company has been loss-making and therefore would have no tax to pay, you still must complete a company tax return which will notify HMRC of the loss for corporation tax purposes. If you do not, HMRC will still be expecting a tax return (and tax to be paid!). Failing to do so will therefore lead to penalties. By filing your tax return, you’ll also be able to choose to either carry your loss back to the previous year if it was profitable (to receive a tax rebate) or carry your loss forwards as tax relief against future profitable years

When do I need to complete a company tax return?

It is important to be aware that the deadline to pay for your corporation tax bill is not the same as the deadline to submit a company tax return! It seems confusing, and to be honest, there is no explanation as to why, but it still remains essential to stay on top of this. You must pay any corporation tax due by 9 months and 1 day from your financial year end date, whilst you must submit the tax return by 12 months after your financial year end date.

What are the fines for late corporation tax returns?

If you are late in filing your company tax return on time, then you can face numerous penalties which will quickly accumulate depending on how long it takes you to finally file. We would therefore urge you to file as soon as possible even if your tax return is late.

Time after your deadline	Penalty amount
1 day	£100
3 months	An additional £100 on top
6 months	HMRC will estimate your corporation tax bill and add 10% as a penalty on top
12 months	An additional 10% of unpaid tax

Another point to be aware of is that, if you are late in completing your corporation tax return three times in a row then the £100 penalties increase to £500 each.

However, if you have filed your tax return on time but are simply late in paying your corporation tax then HMRC will charge your company interest on top of the tax due to be paid. HMRC interest rates are fixed by legislation at 2.5% on top of the Bank of England base rate.

How to pay your HMRC corporation tax bill

There is a wealth of options on how you can choose to pay for your corporation tax bill depending on how quickly you need the payment to arrive with HMRC.

For the same day or next day payment you can use:

• An approved payment through your online bank account
• Through online or telephone banking by faster payments or CHAPS
• Online with a debit or corporate credit card

For payments that will be received within 3 working days you can use:

• Direct debit (so long as you have already set this up)
• Through online or telephone banking by Bacs
• At the counter at your bank or building society

For payments that will be received within 5 working days you can use:

• Set up a new direct debit to HMRC if you have not done so before

Can I make changes to my company tax return after I’ve submitted it?

If you have realised after submitting your company tax return that you have made a mistake, or perhaps forgotten to include a claim for expenditure, then you must correct your tax return. You are able to make amendments to your corporation tax return so long as it is done within 12 months of your filing deadline date. To make changes after you have already submitted it you can either use commercial software, HMRC’s free online filing service (but only if you submitted your return in this way) or write and send a paper return to the Corporation Tax office. The address is:

Corporation Tax Services
HM Revenue and Customs
BX9 1AX

Are there any ways I can reduce my corporation tax liability?

The main way to reduce your corporation tax is to reduce your taxable profits. This might not sound appealing at first as it can seem like you’re making less money, however this is not necessarily the case. For example, where you utilise your company’s earnings to reinvest in the business, this could qualify as allowable expenditure which therefore reduces your profits and corporation tax. However, before blowing all your spare cash on parties or company cars, make sure you make yourself familiar with what qualifies as an allowable business expense! Our article on 10 ways to reduce corporation tax will point you in the right direction as well as introduce you to available tax relief schemes that could also be of benefit.

Get help with your company tax return

We hope this company tax return guide was helpful but if you’re still looking for a company tax return accountant to help then get in touch directly or use our online form. Tell us about your business, what you’d like to achieve and what you need help with the most. We can explain a range of our services that can support you including help you complete your company tax return.