When you set up a new company or organisation you must tell HM Revenue & Customs (HMRC) if it's liable for Corporation Tax, pay any Corporation Tax due and file a Company Tax Return on time. You also need to take action if your previously dormant limited company becomes active again. HMRC Corporation Tax requirements are separate to what your company needs to do for Companies House. This guide explains what you need to do and when.
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When you set up a new company or organisation that's liable for Corporation Tax you must:
You will find out what HMRC mean by 'active' later in this guide.
A limited company comes into existence when it is incorporated or 'registered' at Companies House. Limited companies must file certain documents with Companies House when they are first set up and on an ongoing (normally annual) basis. These Companies House requirements are separate to what your company needs to do for HMRC for Corporation Tax purposes.
Companies House tells HMRC when any limited company is formed and registered with them. But if you use the Companies House Web Incorporation Service and your company is 'active' at the time you incorporate it, for example it has started trading or receiving income, you can choose to supply the statutory information you need to give HMRC when you become active at the same time.
HMRC uses the information they receive from Companies House to set up a computer record for your company and allocates it a reference number known as a Unique Taxpayer Reference (UTR). They then send form CT41G (Corporation Tax - Information for New Companies) to your company's registered office. This form includes your company's UTR so please keep it safe as you will need it to contact HMRC. It also tells you what you need to do if your company has become 'active' and suggests other tax implications your company may need to consider.
It's important that you read form CT41G carefully and take any action that's needed promptly. The following sections cover the main things you need to do and when.
You must tell HMRC that your company is active for Corporation Tax purposes within three months of starting business activity. The easiest way to tell HMRC that your limited company is active and has started its first accounting period is online using either of the following:
Please note: You must have a separate Government Gateway account (User ID and Password) for each company that you want to register with HMRC for Corporation Tax. This will allow HMRC to automatically enrol the company for CT Online once your registration application has been processed.
You can also use the HMRC online service to:
HMRC will update their computer records to reflect the additional information you have provided. They will then write to you to confirm your company's deadline dates for paying Corporation Tax electronically and submitting Company Tax Returns online.
If you used HMRC's online service, your company will be automatically enrolled for Corporation Tax Online. You will receive an Activation Code (or PIN) by post - within seven days of your registration being verified. Please keep this code secure so that no one else can access your online services. When you receive this code you must activate the online service immediately.
If you used the Companies House registration service, or chose to provide information about your company to HMRC in writing, you need to enrol for and activate Corporation Tax Online separately. You won't be able to submit your Company Tax Return online, or use any other features of the online service, until you do this.
If circumstances change and your previously dormant limited company is active again, you must tell HMRC within three months of it starting any business activity - for example when it starts trading or receiving income. The easiest way to do this is to use HMRC's online registration service.
You company may also need to register for other taxes such as PAYE as an employer and VAT.
Your company is an employer for its directors and staff. As an employer, you must deduct PAYE tax and National Insurance contributions (NICs) from your directors/employees' pay each pay period and pay employer's Class 1 NICs if they earn above a certain threshold.
You may need to register the company for VAT if the annual turnover is more than the VAT threshold and submit a VAT Return. You can also choose to register it for VAT voluntarily.
If you're a company director, you will usually need to complete a Self Assessment tax return to tell HMRC about your own income and expenses.
The various requirements to tell HMRC that a company is liable for Corporation Tax, pay any Corporation Tax due and file a Company Tax Return online and on time also apply to members' clubs, Community Amateur Sports clubs, societies, associations and some other unincorporated bodies.
If your organisation is liable for Corporation Tax you must tell HMRC. HMRC need to know some information about your organisation and this is shown on form CT41G (Clubs) (see below). You must provide this to HMRC regardless of whether you have already given it to another HMRC tax area such as PAYE, or another body such as the Charity Commission.
After you tell HMRC your organisation is liable for Corporation Tax, they will send you a form CT41G (Clubs) which will contain your company's UTR. Please complete then return this form to your Corporation Tax Office.
But HMRC does not normally ask clubs and societies with 'very small tax liabilities' (known to HMRC as 'small' clubs) to file a Company Tax Return. Subject to certain conditions, HMRC may treat your organisation as dormant for Corporation Tax purposes. From time to time HMRC will check the tax position for your organisation. If you are unclear about your club or society's Corporation Tax position you should ask your Corporation Tax Office for advice.
If circumstances change and your previously dormant organisation now needs to complete a Company Tax Return, please write to your Corporation Tax Office and include a copy of the latest set of accounts. Or, if your organisation is not obliged to produce accounts by its Constitution or Rules, please include a copy of the:
You can appoint an accountant or tax adviser - known to HMRC as an agent - to deal with HMRC on your behalf when you start a new company or organisation and for all your other Corporation Tax affairs. For example, your agent can tell HMRC your company is active on your behalf. Ask your agent about this if you wish to know more.
If your company or organisation is liable for Corporation Tax, you must keep and retain adequate business and accounting records to file an accurate Company Tax Return and calculate how much Corporation Tax you need to pay.