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Expert anwers: Do I have to pay corporation tax for my small limited company?

Readers question: We have a small Limited Company with a gross turnover of £20,000. We have paid 20% tax on this figure (cis) leaving £16,000 after tax. We have one employee who has earned £12,000 gross. Are we entitled to a rebate and will there be corporation tax to pay?

pay corporation tax for my small limited company

Experts answer: This expert answer comes from Neil Kellaway, Operations Manager at Intouch Accounting.

Based on this example, the company would have a net profit of £8,000 (£20,000 turnover – £12000 salary), in which corporation tax would be currently payable at 19%. Therefore a tax liability of £1,520 would be reported on the company tax return.

As the employees’ salary is below the personal allowance of £12,500 (2019/20), there would be no income tax that the Construction Industry Scheme (CIS) deductions of £4,000 could be offset against. So, once the company tax return has been filed, an online form can be completed to offset the CIS against the corporation tax bill. The remainder of the CIS not returned by HMRC can be offset against future years tax liabilities or refunded back to the company if there will be no tax liability due in future years.

Being able to ask an expert contractor accountant these types of questions whenever you need is essential for any Limited Company contractor. Getting advice that’s tailored to your personal circumstances can mean the difference between paying too much tax, and maximising your take-home pay. Be sure to find an accountant who’s available to answer all your contracting questions, and offer you the expert advice and support you need.

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