UK companies and employers are required to comply with several taxation-related requirements. Business may appear a complex matter, but this quick guide should provide a good introduction to your duties and responsibilities, as well as some useful resources to help you find additional information.
Business Tax for Limited Companies
Limited Companies must file an annual Tax Return no later than 12 months after the end of the applicable accounting period. The tax return takes into account profits and losses relevant to Corporation Tax, as well as a company's Corporation Tax bill. Penalties for late filing apply and range from £100 to up to 10 per cent of any overdue tax amount.
More information on Tax Returns
Accounts and Tax Returns for Limited Companies
Tax Return Late Filing Penalties
Information on the appeals process & definitions of reasonable excuses
Record-keeping for businesses
Registering for HMRC online services
Limited companies are also required to complete a Company Tax return on all profits made during the applicable accounting period. Income generated by limited companies is liable for Corporation Tax, and this applies even when a company has generated no profits or has incurred losses. This period cannot exceed 12 months and usually coincides with a company's financial year, although not always. The current Corporation Tax rate is 20 per cent. There is a deadline that applies to the payment of Corporation Tax, set at 9 months + 1 day after the end of the company's accounting period.
For an overview on Corporation Tax
Details on Corporation Tax Rates and Allowances
More information about Corporation Tax relief is available here.
Find more about accounting periods of Corporation Tax purposes.
Business Partners and Partnerships
Different tax requirements apply to partnerships. These are required to prepare a Self-Assessment tax return instead of the standard Tax Return mentioned above. Filing the Self-Assessment tax return is the responsibility of the nominated partner, who will receive a letter from HMRC towards the end of the tax year.
Business partnership Self-Assessment returns can be filed online after the nominated partner has set up an account with HMRC. Specialised software can be used for online filing. Otherwise, the return can be completed using form SA800, which is available from the Gov.uk site.
The deadline for partnership tax returns is 31 January after the end of the relevant tax year (for online returns), or 31 October after the end of the relevant tax year for paper returns.
More information about setting up and running a business partnership
Approved software suppliers for Online Self-Assessment tax returns
Self-Employed Tax and National Insurance
Self-employed individuals must contribute towards their own National Insurance and tax dues. National Insurance Contributions are calculated based on the profits made and are collected based on the Self-Assessment tax return. VAT registration is voluntary for self-employed individuals whose annual turnover is equal or higher than £83,000.
General information on self-employment and sole traders
Registering for Self-Assessment (self-employed workers)
National Insurance Rates for Self-Employed individuals
Record-keeping for self-employed workers
Self-employment and VAT
Value Added Tax (VAT)
Many goods and services sold in the UK incur Value Added Tax (VAT). Only VAT-registered businesses can charge VAT and they must report to HMRC the total amount charged over every 3-month period. This is done via a VAT return. Different VAT rules apply to companies who sell goods/services to the EU.
VAT is charged through a 3-tier system consisting of zero-rated goods, reduced-rate goods, and standard-rate goods.
General information about VAT
Current VAT rates
VAT and EU customers
PAYE for Employers
The PAYE scheme is in place to collect National Insurance contributions and Income Tax from employees. Employers are responsible from deducting these from every payslip and sending them to HMRC via payroll software or the PAYE Online service. Employers can also appoint third parties (accountants) to operate PAYE.
Late payment penalties apply and vary between 1 and 4 per cent of the outstanding amount, depending on the number of times that an employer has failed to pay on time. Penalties are also calculated based on the specific payment arrangement the company has in place (quarterly, annually, etc.).
Late PAYE payments
Business rates are applied to some commercial properties and are calculated according to the property's rateable value. The specific rates depend on the property's location, among other factors. Business rates are collected by your local city council and are usually collected during the first quarter of the year.
In some cases, an incorrect business rate bill may be sent. Any errors on the property's rateable value must be brought to the attention of the Valuation Office Agency.
General information on business rates
Calculating business rates
Business rate valuation check
Business rates relief and exemptions
Business rate appeals
Valuation Office Agency website
Tax decisions (including penalties and decisions regarding tax relief) may be appealed before a tax tribunal. Appeals must be filed in writing and you must do so within the deadline specified in the letter that contains the decision (usually set to 30 days).
Tax decisions can also be appealed via the Alternative Dispute Resolution system. This is a mediation process whose advantages include faster processing times and reduced costs when compared to a tribunal appeal.
General information on Tax Tribunal Appeals
Appealing a tax penalty
Alternative Dispute Resolution for Tax Disputes
Alternative Dispute Resolution & HMRC