Taxes For Limited Companies

Registering for Taxes

Once you register your new Limited Company in the UK. there are 3 main types of taxes which you need to ensure that the company is registered for: 

  1. Corporation Tax
  2. VAT (only compulsory when you cross £85000 turnover in a 12 month period)
  3. PAYE (if you plan to employ people)

Self Assessment Tax – Company Directors may need to register for Self Assessment Tax as well. 

Corporation Tax

Once your Company is incorporated HMRC will issue a CT41G notice which will contain your company UTR (unique tax reference number) This UTR number is required to complete your tax registration online. This will usually be issued within 14 days and will be delivered to your Registered Office Address.

It is important that you keep your UTR number safe, as you will need it to register for any other taxes (such as PAYE or VAT). It will also be required for submitting and paying any Corporation Tax due. 

Corporation Tax is a tax paid on profits of a company for a specific period. In the UK the rate of corporation tax is currently 19%. 

A company must submit a CT600 (Company Tax Return Form) to HMRC within 12 months of the period end to which it relates to.  You will need to pay any outstanding Corporation Tax Liability within 9 months and 1 day of the end of the period to which it relates. 

VAT 

Vat is a tax levied on the sale of goods and/or services by UK businesses.  It is compulsory for a business to register for VAT if the turnover is expected to, or does exceed £85000 in a 12 month period. 

The standard VAT rate in the UK is currently 20%

If your company is VAT registered you will be required to

  1. – Charge VAT on each of your invoices
  2. – Submit quarterly VAT returns before the due date
  3. – Pay any VAT owed by the due date
  4. – Keep an account of VAT on an ongoing basis (ie. proper record keeping) 

Check the latest VAT Updates on HMRC website

Making Tax Digital 

Tax is changing. The UK Government’s new tax initiative is set to revolutionise the industry. Under this new system, the information will be filed electronically using government-approved software and paper submissions will no longer be accepted. 

PAYE (Paye As You Earn)

If you intend to pay the director a salary or employ UK based staff – you will need to register for PAYE in advance. 

What happens when an employee is paid: 

  • You will be required to deduct income tax and national insurance from their salary 
  • You will need to pay these deductions over to HMRC 
  • A declaration of this will need to be made using RTI rules every time you make a salary payment. 

Taxable Benefits 

If you provide taxable benefits or make certain expense reimbursements to any individual in the business, these need to be reported to HMRC each year on a P11D form. 

Was this article helpful?