BUSINESS & PERSONAL TAXES
When running your own business, there are various types of taxes you must be aware of, these include:
As a limited company you are required to pay Corporation Tax on trading profits you make. As a limited company you should:
- Register for Corporation Tax when you start doing business or restart a dormant business. Unincorporated associations must write to HMRC.
- Keep accounting recordsand prepare a Company Tax Return and calculate the tax due.
- Pay Corporation Tax or report if you have nothing to pay by your deadline – this is usually 9 months and 1 day after the end of your accounting period.
- File your Company Tax Return by your deadline- this is usually 12 months after the end of your accounting period. You must still send a return if you make a loss or have no Corporation Tax to pay.
If you need help with any of the above then please feel free to get in touch, we would be delighted to take away the stress of completing and filing your Corporation Tax return.
When the taxable turnover of your business exceeds the VAT threshold of £85,000 you are required by law to register for VAT. Some businesses choose to register for VAT voluntarily even if they do not exceed the threshold because it is in their best interest to do so.
If you are VAT registered, then you need to keep accurate VAT records and issue VAT invoices to customers. You will also have to complete online VAT returns to HMRC every quarter and pay any VAT owed electronically. When filing your VAT return online you must also be compliant with the Making Tax Digital requirements.
Here at Harvest Accountants, we can assist your business with their VAT commitments to ensure you file your VAT returns on time and avoid any penalties and interest charges. We use digital software for all our clients to file VAT returns ensuring compliance with the Making Tax Digital requirements. For more information on our VAT services please click here.
PAYE and NATIONAL INSURANCE
PAYE is HMRC’s system to collect Income Tax and National Insurance from employment. If you employ staff, then you normally have to operate PAYE as part of your payroll and you will need to make appropriate PAYE and National Insurance (NI) deductions from their wages.
The payroll software will work out how much tax and National Insurance you owe, including employers National Insurance. The tax owing is then paid over to HMRC each month or quarter depending on how frequently you run your payroll.
Your PAYE bill may include:
- Employee Income Tax deductions
- Class 1 and 1B National Insurance
- Class 1A National Insurance on termination awards and sporting testimonials
- Student Loan repayments
- Construction Industry Scheme (CIS) deductions
- Apprenticeship Levy payments (starting from April 2017) if you, or employers you’re connected to, have an annual pay bill of more than £3 million
- Class 1A National Insurance on work benefits that you give to your employees
- PAYE Settlement Agreements are also paid separately.
If you need help with your payroll setup and PAYE payments, then please contact us. We have various payroll solutions, and we can recommend the best one for your business to ensure you are reporting and paying your PAYE taxes on time to avoid penalties and interest.
CAPITAL GAINS TAX FOR BUSINESS
You may have to pay Capital Gains Tax if you make a profit (‘gain’) when you sell (or ‘dispose of’) all or part of a business asset.
Business assets you may need to pay tax on include:
- land and buildings
- fixtures and fittings
- plant and machinery, for example, a digger
- registered trademarks
- your business’s reputation
You pay Capital Gains Tax if you’re a self-employed sole trader or in a business partnership. Other organisations like limited companies pay Corporation Tax on profits from selling their assets. You may be able to reduce or delay the amount of Capital Gains Tax you have to pay if you’re eligible for tax relief.
If you would like help with your capital gains tax calculations or advice on potential reliefs then please get in contact with us, we would be delighted to help.