Corporation Tax is payable on the taxable profits of the company. This is usually very similar to the profits shown in the company's accounts. The main difference is that the depreciation shown in the accounts is added back, then Capital Allowances are deducted. Sometimes this results in accelerated depreciation (the Chancellor may announce something in the Budget to encourage investment), but in the long run the result is the same. 

Until a few years ago, Advance Corporation Tax (ACT) had to be paid when a company paid a dividend, so that the final payment was just a balancing amount. Now the whole of the Corporation Tax is paid nine months after the end of the relevant Company Financial Year. This is completely separate from the normal April to April Tax Year e.g. if the company's year ends on 30th October, the Corporation Tax will be payable on the 1st of August of the following year. This means that the company has the use of the cash for another nine months. This cash flow benefit was the reason given for the abolition of ACT.

Corporation Tax is calculated by the company's accountant when the accounts are prepared; it is not easy to calculate yourself. Rates are given at http://www.inlandrevenue.gov.uk/rates/corp.htm . For the companies which would use Independence the rate would probably be between 10% and 20%. The accountant will also send the computation to the Inland Revenue, who will issue a form CT620 to the company stating the amount and date for payment. This form includes a payment slip to be used to make the actual payment. 

It is very important that you pay the money on or before the due date. If you do not you will be liable to interest at the rates set out on http://www.inlandrevenue.gov.uk/rates/interest.htm and, quite possibly, a penalty. 

It is, therefore, important to always remember that the relevant amount of money is in the bank account, and should not be spent on other things.

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