21 January 2014    |    Taxation

Improve the timing of your Corporation Tax bill

Benjamin Franklin said there was nothing certain but death and taxes, and whilst we can’t help with the former, we can help you to improve the timing of the later.

If you have made a hefty profit last year, and are struggling this year, the last thing you may need is a substantial Corporation Tax bill to further disrupt your cash flow.

If your company makes a profit of £100,000 for the year to 31 March 2014, then the CT of £20,000 will be due on 1 January 2015.

But if you have made a loss of £30,000 for the first six months, then you might want to think about extending your accounting year to 30 September 2014 – which is the maximum length possible.

This has two benefits, the first of which is that the overall tax liability will be reduced to £14,000.

However, because of the very precise and particular Corporation Tax rules, the profit is spread evenly across the entire period meaning that only £9,333 is due on 1 January 2015 and £4,667 is not due until 1 April 2015.

Whilst you may not have avoided the tax bill, you have reduced the cost and spread the burden which could make a significant difference to your company.


The information provided is for general information purposes only.

Legislation and details may have changed since this was written.  The text may not include all matters that are relevant to your individual situation.

You should not make decisions, or refrain from making decisions, without taking further professional advice about your specific circumstances.

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