Recording Corporation Tax

You should record your corporation tax payments in the journal.  Firstly, you will need to create an account to record it in.  Head to Settings > Chart of Accounts > Add Account and add the following details:

Each corporation tax payment could be recorded using the following journal entries.  In this example the payment is £1500.

If you prefer to first record your corporation tax liability and then later record the corporation tax payment, you will need to do the following:

Firstly, create a liability account called Provision for Corporation Tax in the way outlined above, then post the following journal entries:

  • When tax is calculated:
    Debit Corporation Tax (Equity) <Corporation Tax Amount>
    Credit Provision for Corporation Tax (Liability) <Corporation Tax Amount>
  • And when tax is paid to HMRC:
    Debit Provision for Corporation Tax (Liability) <Corporation Tax Amount>
    Credit Business Bank Account <Corporation Tax Amount>