Tax and NI

5. Corporation Tax

Corporation tax is payable on the profit - sales less allowable expenses, plus investment income and chargeable gains (see 14) - of a limited company.

Expenses are covered in 5 to 9.

5.1 There are two corporation tax bands for the financial year 2008 (ending 31 March 2009):

5.2 Companies have to calculate their own corporation tax liability.

• Companies with profits over £1.5 million pay corporation tax by quarterly instalments.
• Interest is charged on underpayments.
• The tax return can be filed later - normally up to 12 months after the accounting year end. It must be accompanied by accounts. Late returns incur automatic penalties.

5.3 Small to medium-sized companies (with profits of up to £1.5 million) continue to pay corporation tax nine months after the company's accounting year end.