Archive for the ‘limited companies in the UK’ Category

What are the tax rules for limited companies in the UK?

As we all know taxes play a very important role in the development of any state or country, it is very important for everyone to pay his taxes in time. If we talk about the UK almost half of the British workers are getting their salary by a limited company. People here are aware of the benefits and demerits of filling (or not filling) their tax on time. When it comes to the payment of taxes there are certain rules that a limited company of the UK has to follow. In this article we will discuss on those aspects:

Understanding the Limited Company Tax

There are various kinds of Taxes which limited companies are liable to pay. If you are setting up a limited company you have to understand and follow some rules. First is its basic, if you are starting a limited company you should always keep all the personal and business finances separate, because now you will be wholly and solely responsible for your every expenditure.

Appointment of an accountant

It will be best if you appoint an accountant for keeping the records of your limited company. Although many people maintain their track records by themselves but it would be best to appoint an accountant to maintain your expenditure, because your accountant will be dealing with HMRC (Her Majesty’s Revenue and Customs) on your behalf.  To aid communication it is best to choose a local accountant, for example, companies based in south Wales would benefit from an accountants in Cardiff.

Corporation Tax

All limited companies should pay their Corporation Tax on their profits. Always register your new company in order to pay Corporation Tax. It is important to pay this Tax within nine months and to pay the yearly Tax return (CT600). For smaller companies it is 20 percent on profits up to £300,000.

The VAT (Value Added Tax)

If the turnover of your company is £82,000 or more during the period of one year, then your company should be registered for Value Added Tax (VAT). There are different types of schemes related to VAT. The cash schemes will make you capable of repaying VAT. The Flat Rate VAR scheme will make the calculations of your Tax easier.

National Insurance Contributions

The other important rule is to set up your company on the payroll. So if the company is giving salary to you or any of the employee income tax and NICs are deducted automatically and is paid to HMRC on a monthly or quarterly basis.

Other Taxes

Besides these limited company is liable to pay tax on their personal income or in the form of dividends. You should also pay all your tax liabilities by self-assessment process every year. This should be done before 31st of January.