04: The company's tax

The intermediary company must pay corporation tax on its profits in the usual way with one difference. In calculating taxable profits the company can deduct the deemed salary and associated NIC.

The deduction is made in the accounting period in which the deemed payment date falls. If the company’s accounting date is not 5 April, this can result in corporation tax profits in some periods and losses in others, because the deemed salary is based on income of the tax year not of the accounting period. You can stop this happening by making actual salary payments that are large enough to prevent a deemed salary arising on the following 5 April.