The most important tax liability that applies to limited companies is Corporation Tax. This is a levy on your company's profits, left over once your business expenses, including your salary have been deducted from your turnover. Trading profits, profits from investments and capital gains are all subject to Corporation Tax.
When you start up as a limited company contractor, then you will have to assess your business each year for corporation tax. You have to work out and know your own tax liabilities, pay that tax and ensure that you deliver all required information to HMRC before their deadlines – or face a substantial fine.
Of course, you won't have to physically do it yourself. Getting this right is one of the main reasons you need a specialist contractor accountant such as we can offer at EAFS.
Corporation Tax Rates for Contractors
There are two rates of corporation tax set according to the level of profits you make. In the 2012/13-tax year, you pay 20% on profits of up to £300,000. Known as small profits rate this will apply to almost all IT contractor companies.
The main rate is 24% on profits of £1.5 million and above. Companies that make profits between £300,000 and £1.5 million pay marginal relief on the level of profits between the two rates.
Why Choose EAFS?
- We are Payroll Experts: We have major experience in Europe and hold all necessary licences for distributing payroll across the EU.
- Value for Money: Our fees are highly competitive and very reasonable, especially compared to other firms.
- We are on top of the Latest EU Developments: The legislation for the European Union is constantly changing, we stay up to date with all developments to provide the most legally compliant service at a competitive price.