Understanding Company Accounts and Corporation Tax in the UK

Introduction

Running a business in the UK means fulfilling several legal obligations, including filing company accounts and paying corporation tax. These requirements apply to most limited companies and can have significant financial implications if not managed correctly. In this blog, we’ll explore what company accounts and corporation tax are, who needs to file them, and what you need to know to stay compliant with UK law.

What are Company Accounts?

Company accounts are financial statements that businesses must file with Companies House every year. These accounts provide a snapshot of the company’s financial health, including details about assets, liabilities, income, and expenses. These reports ensure transparency and accountability to shareholders, creditors, and the public.

Who Needs to File Company Accounts?

• All limited companies
• Some partnerships (limited liability partnerships – LLPs)
• Certain organizations classified as companies for tax purposes

What is Corporation Tax?

Corporation tax is a tax on the profits made by a company. All UK-based businesses must pay corporation tax on their taxable profits, which includes income from sales, investments, and the sale of assets. Currently, the main corporation tax rate in the UK is 25% (2023).