YEAR-END ACCOUNTS FOR LIMITED COMPANIES

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Our comprehensive year-end accounts for limited companies service handles the preparation and submission of your annual accounts and tax return. A copy of your year-end accounts should be sent to all shareholders, Companies House and HMRC. The accounts must include your company’s:

- Balance sheet;

- Profit and loss account;

- Notes to the accounts; and

- Director’s report.

YEAR-END ACCOUNTS EXPLAINED

When preparing year-end accounts, it is crucial to consider three size classifications of companies: small (which includes the subset of micro-entities), medium, or large. Your company qualifies as ‘small’ if it meets at least two of the following criteria:

- Turnover of £10.2 million or less;

- Balance sheet total of £5.1 million or less; and

- 50 or fewer employees.

From 6 April 2025, new company size thresholds will apply:

- Turnover of £15 million or less;

- Balance sheet total of £7.5 million or less; and

- 50 or fewer employees.

If your limited company qualifies as a small company, you are not obliged to get your year-end accounts audited. As a result, we can submit simplified accounts to Companies House, subject to agreement from all members. However, certain companies may still be required to undergo a statutory audit even if they fulfill the criteria for exemption. Further information can be found here.

Abridged accounts consist of a streamlined balance sheet (approved by a director) and a simplified profit and loss account (optional). You have the authority to choose whether you wish us to transmit a copy of the director’s report and profit and loss account to Companies House. Note that choosing abridged accounts means less of your company’s information will be publicly accessible via Companies House.

WHAT IS CORPORATION TAX?

Corporation Tax is the fourth largest source of revenue stream (following Income Tax, National Insurance contributions, and VAT) for the UK government. As its name implies, it constitutes a corporate tax imposed on the profits generated by:

- UK resident companies; and

- Entities registered overseas with permanent establishments in the UK.

Prior to 1965, companies were subject to income tax on their profits at the same rate applicable to individual taxpayers. However, the Finance Act of 1965 introduced a new framework for companies and associations, replacing the previous arrangement with a unified corporate tax structure. This newly implemented system borrowed its fundamental structure and regulations from the existing income tax system.

YOUR LIMITED COMPANY

Your limited company is liable for Corporation Tax on its profits. If your company operates in the UK, it must pay Corporation Tax on all its profits from activities within the UK and abroad. If your company is not based in the UK but has an office or branch within the country, it is obligated to pay Corporation Tax only on profits earned from activities conducted within the UK.

You are required to submit a company tax return (CT600) if you have received a 'notice to deliver a company tax return' (CT603) from HMRC. This notice is issued to every company that HM Revenue and Customs deems to be active.

The current Corporation Tax rate is 19% for companies with profits below £50,000. The main rate of 25% applies to companies with profits exceeding £250,000.

THE DEADLINE

Typically, companies are required to submit their Corporation Tax returns by a deadline of up to 12 months following the conclusion of the accounting period. In the case of establishing a new small business, it is important to ensure that you register for Corporation Tax within 3 months of commencing your trading activities.

The deadline for paying your Corporation Tax bill is 9 months and 1 day after the end of your accounting period. For instance, if your accounting period ends on the 31st of March, your Corporation Tax payment is due by the 1st of January.

SUPPORT & ADVICE FOR UK SMALL BUSINESSES

Xcountant® helps small business owners save time, reduce stress, and stay compliant. Speak with our team today to prepare your year-end accounts accurately and on time. Our accountants prepare your year-end accounts and help you understand your company's financial position; both on its own and within its industry. The profit and loss account and balance sheet are some of your most powerful tools for understanding your business's health and making informed decisions. Join Xcountant® now!