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6 Apr 2022
Corporation Tax and Dividend Rates 2022 / 2023
Corporation Tax
Corporation Tax is a Tax levied on profits from doing business. This will include profits from:
a limited company
any foreign company with a UK branch or office
a club, co-operative or other unincorporated association, eg a community group or sports club
There are specific things you must do to work out, pay and report your tax.
Register for Corporation Tax when you commence Trading or restart trading of a dormant company.
Keep and maintain accounting records of all transactions in relation to trading and investments by the company. You must also file a Corporation Tax Return for the company
Pay Corporation Tax or report if you have nothing to pay by your deadline - this is usually 9 months and 1 day after the end of your ‘accounting period’.
File your Company Tax Return by your deadline - this is usually 12 months after the end of your accounting period
Your accounting period is normally the same 12 months as the financial year covered by your annual accounts.
Corporation Tax Rates
Dividends
If you buy and own shares in a company or are a Director or Share Holder in a Limited company you will are likely to receive or pay yourself Dividends.
Note: You do not pay Tax on Dividends if:
Dividends are paid from shares held within an ISA
The Dividend amounts fall within your Personal Allowance
Fall with in your Annual Dividend Allowance
Dividend Allowance
Tax yearDividend allowance
6 April 2022 to 5 April 2023 = £2,000
Working Out Tax on Dividends
How much tax you pay on dividends above the dividend allowance depends on your Income Tax band.
Tax band Tax rate on dividends over the allowance
Basic rate 8.75%
Higher rate 33.75%
Additional rate 39.35%
To work out your tax band, add your total dividend income to your other income. You may pay tax at more than one rate.
Example
You get £3,000 in dividends and earn £29,570 in wages in the 2021 to 2022 tax year.
This gives you a total income of £32,570.
You have a Personal Allowance of £12,570. Take this off your total income to leave a taxable income of £20,000.
This is in the basic rate tax band, so you would pay:
20% tax on £17,000 of wages
no tax on £2,000 of dividends, because of the dividend allowance
8.75% tax on £1,000 of dividends
Pay Tax on up to £10,000 in Dividends
Tell HMRC by :
contacting the helpline
asking HMRC to change your tax code - the tax will be taken from your wages or pension
putting it in your Self Assessment tax return, if you already fill one in
You do not need to tell HMRC if your dividends are within the dividend allowance for the tax year.
Pay Tax on over £10,0000 in dividends
You'll need to fill in a Self Assessment Tax Return
If you do not usually send a tax return, you need to register by 5 October following the tax year you had the income.
Register for Self Assessment
You’ll get a letter telling you what to do next after you’ve registered.