Business savings accounts and tax

[dzug2]

It would appear that all business accounts pay gross interest, and casual enquiries suggest that they cannot do otherwise even if asked.

Why is this - are businesses not normally liable to tax? (sounds highly unlikely). Or is it that they are subject to corporation tax instead?

[factor-fiction]

I assume it's because the tax deducted at source for individuals is income tax, and companies do not pay income tax

[d9f1c7]

They are liahble to corporation tax but it's accounted for in their annual accounts, the interest will be treated as income and taxed if the businiess produces a net profit.

[Skyline D]

"Business accounts" certainly do NOT pay interest gross as a matter of course. All bank accounts pay interest net as a default position. Where the holder of the account is a Limited Company (which isn't the same thing as a "business", the vast majority of businesses in the UK are not companies) then the interest should indeed be paid gross as companies are not subject to income tax and corporation tax is dealt with differently.

[buildersmate]

.... and Limited Companies that pay Corporation Tax are required to declare bank and other interest as 'Other Income' which results in these sums being included in the net profit before tax figure, on which Corporation Tax liability is assessed.