Corporation Tax in UK

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Corporation Tax in UK.

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Who is subject to Corporation Tax requirements?

The following limited companies and unincorporated organisations are subject to Corporation Tax requirements:

  • limited companies incorporated in the UK
  • foreign-based companies with a permanent place of business in the UK
  • members’ clubs, such as social clubs, sports clubs and holiday clubs
  • societies, such as friendly societies and provident societies
  • associations, such as housing associations and trade associations
  • co-operatives
  • other unincorporated associations
  • groups of individuals carrying on a business that is not a partnership
  • charities, or companies that are subsidiaries of – or wholly owned by – a charity
  • NHS foundation trusts if they are carrying out significant commercial activities that are not part of core health care delivery, such as running a commercial laundry

The taxable profits or surpluses of these businesses and organisations are subject to Corporation Tax requirements.

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Who is not subject to Corporation Tax requirements?

Businesses and organisations that are not subject to Corporation Tax requirements include:

  • sole traders – one-person businesses that are not operating through a limited company
  • traditional partnerships
  • limited liability partnerships (LLPs)
  • local authorities
  • local authority associations
  • investment clubs
  • allotment and garden societies
  • health service bodies
  • London Organising Committee of the Olympic Games Ltd and the International Olympic Committee

If your business or organisation is not subject to Corporation Tax, you don’t need to meet Corporation Tax deadlines and requirements.

This doesn’t mean your business is exempt from all taxes as you may have to complete a Self Assessment return.

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What is Corporation Tax and who is subject to Corporation Tax requirements?

Corporation Tax is a tax on the taxable profits of limited companies and some organisations including clubs, societies, associations, co-operatives, charities and other unincorporated bodies.

Taxable profits for Corporation Tax include:

  • profits from taxable income such as trading profits and investment profits (except dividend income which is taxed differently)
  • capital gains – known as ‘chargeable gains’ for Corporation Tax purposes

If your company or organisation is based in the UK, you’ll have to pay Corporation Tax on all your taxable profits – wherever in the world those profits come from.

If your company isn’t based in the UK but operates in the UK – for example through an office or branch (known to HMRC as a ‘permanent establishment’) – you’ll only have to pay Corporation Tax on any taxable profits arising from your UK activities.