I’m worried that the cash my company has on deposit is not covered by the Government’s guarantee for personal bank accounts. Should I pay my corporation tax early so the money is secure and I know that debt will be paid?
Deposits made by small companies in UK banks are covered by the Financial Services Compensation Scheme, for up to £50,000 per bank. A small company is one that meets at least two the following three conditions:
- Not more than £6.5 million annual turnovers;
- Not more than £3.26 million net assets on the balance sheet; and
- No more than 50 employees
You could pay your corporation tax early in which case HMRC will eventually pay interest at 4.25% on the amount paid before it is due when the corporation tax return for the year is submitted and agreed upon. This interest will be taxable in the company’s accounts. Remember to use the correct reference when paying the corporation tax.