Corporation Tax for Non-UK Companies

If your company is incorporated outside the UK but operates or earns income here, you may need to pay UK Corporation Tax. The rules depend on whether your company is UK resident, has a permanent establishment in the UK, or earns rental income from UK property. You must registe...

Introduction

Who needs to register for Corporation Tax

You must register a non-UK incorporated company for Corporation Tax if you are not required to register with Companies House and you meet any of these conditions:

You dispose of UK property or land (including through collective investment vehicles treated as companies)
You are an offshore property developer dealing in or developing UK land or property
You are trading through a dependent agent permanent establishment in the UK
Your company is UK resident (meaning its central management and control is in the UK, unless a double taxation arrangement awards sole residence to another territory)

Different rules apply if you are a non-resident company landlord receiving rental income from UK property.

Registration deadlines

You must register within 3 months of the date you become liable to UK Corporation Tax. For UK resident companies, you become liable from the date the company became UK resident.

What you need to register

When registering, you must provide:

Your company name and any previous names
Country of incorporation and foreign registration number (if you have one)
Address of the company's registered office
Date of incorporation
Date the company became liable to Corporation Tax
Date the company intends to prepare its first accounts
Name and registered office address of the parent company (if part of a group)
Your name, role in the company, telephone number and email address

How to register

For UK resident companies, you can fill in the registration form online, then print and send it to HMRC at the address shown on the form.

If you cannot register online, write to HMRC instead. Include the dummy Unique Taxpayer Reference 2410555555 at the top of your letter, along with all the information listed above. Send your letter to:

Corporation Tax Services

HM Revenue and Customs

BX9 1AX

United Kingdom

After you register

HMRC aims to process your registration within 15 working days. You will receive:

A Corporation Tax Unique Taxpayer Reference (UTR) by post
Further information about what to do next

Your UTR and additional information will be sent to the company's overseas registered office. Allow 2 to 8 weeks for delivery.

Once you receive your UTR:

1. Set up HMRC online services

2. Add Corporation Tax to your account (you'll be sent an activation code by post)

3. Wait for your activation code to arrive at the overseas registered office (2 to 8 weeks)

You cannot register for HMRC online services or file your return before receiving your UTR. If your activation code doesn't arrive or expires, you can request a new one.

Filing and paying Corporation Tax

You must use suitable commercial software to prepare and submit your Company Tax Return online. You cannot use HMRC's free filing service.

You do not need to register with Companies House unless you have a permanent establishment in the UK.

Calculate your profits using Corporation Tax rules and the appropriate accounting periods for your company.

Special rules for non-resident company landlords

From 6 April 2020, non-UK resident companies earning rental income from UK property must pay Corporation Tax instead of Income Tax on those profits. This applies to companies who invest in UK property directly or through collective investment vehicles.

Automatic registration for existing landlords

If you had an existing UK property business on 5 April 2020, you were automatically registered for Corporation Tax and sent a Company UTR. If you did not receive your UTR by 30 June 2020, or if you already had a company UTR, you should have contacted HMRC.

Companies starting a UK property business on or after 6 April 2020 are not automatically registered and must register themselves.

What non-resident landlords must do

Once you have your UTR:

Register with HMRC Online Services to file your Company Tax Return online
Get suitable commercial software to prepare and submit your return
Calculate profits using Corporation Tax rules and transitional rules
Tell HMRC in writing if you prepare accounts to a date other than 5 April so they can update their records

Failure to inform HMRC of your accounting date could result in penalties for late filing, as your filing deadline depends on the accounting year-end HMRC has on record.

Agent authorisation

If you have a tax agent or adviser, their existing authorisation from when you paid Income Tax will not be valid for Corporation Tax. You must submit a new authorisation form to allow your agent to deal with Corporation Tax on your behalf. You can do this online or using a paper application.

Transitional arrangements

#### Accounting periods

Your first accounting period for Corporation Tax initially runs from 6 April 2020 to 5 April 2021. If your company prepares accounts to a different date, your accounting periods will:

Begin on 6 April 2020 and end on your company's accounting date for the first period
Begin and end on the same date as your company accounts for subsequent periods

You must file your Company Tax Return within 12 months of your accounting year-end.

#### Carrying forward Income Tax losses

If your UK property business reported a cumulative loss chargeable to Income Tax and was still operating on 5 April 2020, this loss carries forward to Corporation Tax. You can offset it against:

Future profits from the same UK property business
Non-trade loan relationship profits relating to that UK property business

You cannot relieve Income Tax losses against capital gains chargeable to Corporation Tax. These losses must be used before any losses arising on or after 6 April 2020 under Corporation Tax, and are not affected by restrictions on Corporation Tax losses that arose from 1 April 2017 onwards.

#### Capital allowances

If you claimed Capital Allowances under Income Tax, your written down value pools as at 5 April 2020 transfer to Corporation Tax without creating a balancing allowance or balancing charge.

When moving to Corporation Tax in April 2020, you must apportion Capital Allowances between Income Tax and Corporation Tax using the same method you use for calculating your company's profits.

Annual Tax on Enveloped Dwellings

If your property is suitable for residential use, you may also need to pay Annual Tax on Enveloped Dwellings (ATED). This has separate filing and payment obligations from Corporation Tax.

Income Tax for 2019 to 2020

If UK rental income was your company's only source of UK income after 6 April 2020, you did not need to make Income Tax payments on account for 2020 to 2021 and future tax years.

If your company had other UK income chargeable to Income Tax after 6 April 2020, you needed to continue making payments on account, though you could reduce them as property income no longer formed part of your Income Tax liability.

Credit balances

If you had a credit balance in your Income Tax account after settling all liabilities for 2019 to 2020 and earlier years, and UK property income was your only UK income source from 6 April 2020, HMRC would repay these credits. You needed to tick the repayment box on your 2019 to 2020 Non-resident Company Income Tax Return and provide UK bank details.

Sources

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.