Corporation Tax (CT)

The fourth largest source of government revenues is Corporation Tax, charged on the profits and chargeable gains of companies. The main rate band is 30%, which is levied on taxable income above £1.5m. The small companies rate of 19% is charged on the first £300,000 of profits where profits are between £50,000 and £1,500,000.
Profits between the lower and upper profit thresholds (£300,000-£1,500,000), are in effect charged at a marginal rate of tax of 32.75%.
Companies that are resident in the UK are subject to Corporation Tax on their profits (income plus gains) arising in an accounting period which cannot be more than 12 months.
Non-resident companies may be subject to Corporation Tax (CT) where they trade in the UK through a permanent establishment.
• A company incorporated in the UK is treated as UK resident.
• A non-UK incorporated company is treated as resident in the UK if its central management and control is exercised in the UK.

A company's trading losses can normally be set against:
• Income and gains of the same accounting period.
• Income and gains of the previous year.
• Trading profits from the same trade in future years.

In terms of Dividends, companies do not have to pay tax at the time they pay a dividend. Corporation tax is paid at the normal time on the company's taxable profits without any deduction for dividends paid. For small companies, profits that are paid out as dividends are charged at not less than 19%.
A shareholder receives the dividend with an accompanying tax credit equal to 10% of the dividend plus tax credit. The tax credit is equivalent to the basic rate of income tax on dividends. Companies pay no tax on dividends received.
Companies normally have to file their return within 12 months of the end of the accounting period. If a return is filed late, the company is automatically charged a fixed penalty of between £100 and £1,000, depending on how late the return is and whether lateness is habitual. An additional tax-linked penalty is charged if the return is filed more than six months late.
If you need to know more about corporation tax, our tax experts at Taxfile in South London and Exeter can help you understand it better and at the same time minimize your tax liability, making sure you pay the right amount of tax.

Overpayment of tax through PAYE

PAYE (Pay As You Earn) is the system used by employers and pension providers to deduct tax from your wages or pension. If you think you've paid too much Tax through PAYE you can contact Taxfile's tax accountants in South London and they will clarify that for you.

HM Revenue & Customs (HMRC) gives you a tax code that shows your employer or pension provider how much tax to deduct from your wages or pension before you get paid. You'll find your tax code on your P45 or your wages/pension payslip.

It is possible you might have overpaid tax in the following circumstances:
• you started a new job and had an emergency tax code for a while
• you were only employed for part of the year
• your employer was using a wrong tax code
• you're a student who only worked at holiday times
• you had more than one job at the same time
• you stopped working and didn't get any taxable earnings or benefits for the rest of the year
• your circumstances changed - for example you retired, were made redundant or became self-employed
• you have taken a pension in the form of a lump sum rather than a small monthly amount (this is known as 'trivial commutation'), the rate of tax you pay on the lump sum could be higher than the basic rate of tax you pay over the year and could cause an overpayment.

Any overpaid tax from previous years will we calculated by the tax office and they will send you a refund in the post or through bank transfer.

What you need to bear in mind is that you can only reclaim overpaid taxes for up to a maximum of six years previous to the current tax year.