Tax Period for a Limited Company in England

The tax period is the financial year running from 1 April to 31 March. As regards the accounting period, the law merely provides that it ends with the preparation of the annual accounts.

Make sure that the tax period does not exceed 12 months.

Taxable Income and the Tax Base in the UK (Limited Company)

Before 1 April 2009, the UK operated a “schedular system”, under which income was divided according to the source from which it arose. Taxable income is now determined in line with generally accepted accounting principles or IFRS.

The taxable income of a Limited Company is now classified by its origin, with profits from UK and foreign sources having been merged.

Taxable income is now divided into the following categories:

• • trading income,
• • property income,
• • income from loan relationships,
• • income from derivatives,
• • gains relating to intangible fixed assets,
• • gains from the disposal of know-how and the sale of patent rights,
• • miscellaneous income.

Total taxable income is the sum of the taxable income from all of the above categories, with different rules on deducting expenses applying to each category.

Companies in the UK pay tax on their income at a rate that changes over time. Where the accounting period does not coincide with the tax period, profits are apportioned between the tax periods.