How to file a company tax return: requirements, deadlines, late filing penalties

As a small business owner, there are some key reasons why you might choose the path of setting up a limited company. For example, limited companies might carry more prestige than sole traders in your particular sector, meaning that adopting this business structure will help you to get clients.

There’s also a key benefit when it comes to small business risk management. Namely, the fact that a limited company is legally separate from you as an individual, so you won’t be personally liable if it runs into financial difficulties.

Your limited company’s status as a business entity in its own right does increase your tax responsibilities, however. As well as reporting and paying your personal Income Tax and National Insurance contributions every year, you’ll need to know how to file a tax return for a limited company.

In this guide, we’ll cover what the tax return is for, when it’s required, and other things to be aware of when you register a business with Companies House.

What is a company tax return?

Before discussing how to file a limited company tax return, it’s important to understand exactly what the purpose of the process is. That means answering the question: what is Corporation Tax?

An essential element to factor in when assessing your small business finances and drawing up a cash flow forecast, Corporation Tax is a tax paid on the profits generated by a limited company. This includes money made from:

• Selling products and services.

• Investments.

• Selling assets like property or stocks that have gained in value.

There are three rates of Corporation Tax which companies must pay, depending on which profit bracket they fall into for the accounting period:

• Up to £50,000: 19% Corporation Tax.

• £50,001 to £250,000: Percentage calculated on a sliding scale.

• Above £250,000: 25% Corporation Tax.

Filing your company tax return tells HMRC how much your company owes in Corporation Tax. In a separate but related process, you’ll also have to provide Companies House with information on your company accounts.

What goes into company tax returns?

Whatever kind of enterprise you run, whether it’s a low cost business idea from home, or a bustling food and drink business like a food truck or cocktail bar, the company tax return process will require submitting the following financial information:

• CT600 form and supplementary documents.

• Company accounts.

CT600 form and supplementary documents

The CT600 form, often referred to as the company tax return form, is submitted to HMRC. It covers your company’s financial dealings for a specific accounting period, which is usually the same as the financial year covered by your company accounts.

The form provides HMRC with a breakdown of how much your company has made during the period, both from core business operations and from selling assets like property and shares that increased in value (known as chargeable gains). 

Tax deductions for small businesses will be factored in when calculating how much Corporation Tax your company will owe to HMRC. These include allowable business expenses and capital allowances on the value of equipment like, say, point-of-sale technology purchased by your business.

Alongside the CT600 form, you’ll need to provide supplementary documents including your computations, which is a file detailing how the figures on the form have been calculated, and extra forms covering specific financial matters which may relate to your business, such as claiming R&D credits.

Company accounts

Another obligation when running a limited company is to submit year end accounts, also known as company or statutory accounts. These consist of:

• A balance sheet, laying out your company’s assets and liabilities.

• A profit and loss account, also known as an income statement, laying out sales and running costs.

• Notes about the accounts.

• A director’s report, summarising trading activities and its compliance with financial reporting standards.

Company accounts must be submitted to both HMRC and Companies House. However, it’s important to note that “small companies” (and a further sub-category of smaller “micro-entities”) are subject to slightly less stringent requirements.

If your company satisfies any two of the following criteria, it is officially categorised as a small company:

• Turnover of £10.2 million or below.

• £5.1 million or below on its balance sheet.

• 50 employees or below.

If your company satisfied any two of the following criteria, it is officially categorised as a “micro-entity”:

• Turnover of £632,000 or below.

• £316,000 or below on its balance sheet.

• 10 employees or below.

As the figures above show, you can generate a very healthy turnover and still fall into the small business tax bracket for accounting purposes, meaning you won’t have to have your accounts formally audited, and will be able to send abridged accounts to Companies House (as detailed on the government website).

The upshot here is that all kinds of small business entrepreneurs are able to submit simplified accounts to Companies House, from those running high turnover businesses like food trucks and restaurants, through to home-based business owners capitalising on hobbies that make money or pursuing side hustle ideas like providing services to the local community.

How to register for Corporation Tax

One of the legal requirements for starting a small business with the limited company structure is to register with Companies House. Doing this online costs £50 and will automatically register your company for Corporation Tax at the same time.

Registering with Companies House is a simple process which requires submitting information such as place of birth, relatives’ names and your National Insurance number. You’ll also need to provide an official company address and a unique company name. An online directory lets you quickly check if your preferred name is available.

Once you’ve registered, HMRC will automatically issue a Unique Taxpayer Reference (UTR), a 10-digit number which will identify your company within the tax system and must be included in company tax returns.

It’s vital to be aware that you must register for Corporation Tax within three months of your company becoming active. You don’t have to be generating revenues from products and services for your company to be considered active. 

The clock will also start ticking from the moment your company engages in other tangible business activities like hiring employees, rolling out an advertising campaign for your business, renting business premises, or receiving income from small business crowdfunding efforts.

On the other hand, any preliminary preparations for starting a business, such as brainstorming how to come up with a business name or writing a business plan, won’t start the countdown to the registration deadline.

How to file a limited company tax return

You’ll be able to submit your company tax return documents online through the official government site, or by using small business accounting software. The HMRC online filing service and accredited accounting software will automatically convert your tax computations to the correct format for submission.

You may be able to file with both HMRC and Companies House through the online portal at the same time if you have a limited company which does not require an auditor (as explained earlier). Otherwise, you may have to separately file your accounts with Companies House.

Here are the filing deadlines you need to be aware of:

• First accounts with Companies House: 21 months after registering with Companies House.

• Annual accounts with Companies House: Nine months after the end of your company’s financial year.

• File company tax return with HMRC: 12 months after the end of your company’s accounting period for Corporation Tax (normally same as financial year).

It’s undeniably a lot to keep on top of, which is why many limited company owners prefer to hire an accountant to manage their tax issues and submit documents on their behalf. 

Even if you do have a financial expert handling this side of things, it’s important to keep track of your small business expenses, and remain diligent when it comes to small business bookkeeping, so that you’re aware of roughly how much your company is due to pay in Corporation Tax.

This will allow you to plan ahead so you won’t be caught out by your tax bill and will have the funds to cover what you owe without causing problems for your company cash flow.

How to pay your Corporation Tax bill

Your Corporation Tax bill payment deadlines depend on how much your company made in profit.

• If you have taxable profits of up to £1.5 million, you’ll need to pay your Corporation Tax bill within nine months and one day of the end of your accounting period.

• If you have taxable profits of over £1.5 million, you’ll usually be expected to pay in installments, with different time frames for companies with profits of between £1.5 million and £20 million, and more than £20 million.

You can choose to pay Corporation Tax online, by Direct Debit, by telephone banking, or in person at your bank or building society.

What are the penalties for late filing of company tax returns?

It pays to be punctual when it comes to your company tax return, as you’ll be slapped with a charge if you miss your deadline. The charges are as follows:

• One day after the deadline: £100.

• Three months after the deadline: Another £100.

• Six months after the deadline: HMRC will estimate your Corporation Tax Bill and add 10%.

• 12 months after the deadline: Another 10% of tax.

These penalties are a reminder that staying on top of your company tax return is as important as coming up with the right pricing strategies, identifying target markets, and all the other responsibilities you’ll have as a small business owner.

Disclaimer: The contents of this page are intended for informational purposes only and should not be construed as professional advice. For matters requiring legal or financial expertise, it’s recommended to seek guidance from qualified professionals.