Far too many businesses don’t engage an accountant right from the start and misunderstand the complicated tax rules. Many more file returns late or prepare them incorrectly. Penalties for late tax and incorrect returns can bankrupt your business. What’s more the stress of meeting strict tax deadlines whilst keeping on top of cashflow can be all too much for the small business person. You’ll need help from your accountant so you understand how much to put aside and get all your returns submitted correctly and on time.

Corporation Tax 

Q Who’s it for?                                    

A Limited companies

Q How’s it calculated?                       

A It’s based on the company’s taxable profits for the year. If directors owe the company money at the end of the year and haven’t repaid it within 9 months the company will have to pay more tax. You’ll have to prepare statutory accounts as well and file those at Companies House.

Q When is the return due and when’s the tax payable?  

A The corporation tax return is due one year after the company year end. The tax is payable nine months and one day after the year end.

Q How easy is it to do yourself?

A If you’ve no accountancy or tax experience you’ll misunderstand and get things wrong so could pay more tax than you should. Don’t just hope for the best and do it yourself, because it could cost you a fortune in accountancy fees to sort things out later. Your clients, suppliers and future mortgage broker will not be impressed if they see odd looking accounts filed at Companies House. Accountants train for five years to understand taxes – there’s much more to it than you could possibly imagine!

PAYE

(a)Payroll

Q Who’s it for?                                     

A Any business/ entity/person who employs staff.

Q How’s it calculated?                       

A You’ll need payroll software to do this yourself. The software will calculate tax and NI and other deductions for you, but you’ll have to understand quite a few rules and regulations, many of which change annually.

Q When are returns due?                 

A You must submit various returns to HMRC at specific times during each payroll period. Woe betide you if you forget.

Q When’s the tax payable?             

A By 22nd of the tax month after the payroll has been run.

Q How easy is it to do yourself?

A Although the software calculates the tax and NI, you’ve got to work out pay before deductions and tax. That can be complicated– and it’s easy to get it wrong. The more employees you have and the more adjustments they have to their pay each payroll the more likely it will become a complex task.

Payroll has other complications, such as autoenrolment pensions, so that will take even more of your time. You may also have to prepare P11D’s or even a PSA.

(b)CIS Tax

Q Who’s it for?                                     

A If you do any work in the construction industry you /your business will need to register with HMRC for this separately. If you use subcontractors for building work you must also register.

Q How’s it calculated?                       

A Customers who are themselves in the construction industry must deduct 20% from your invoices and pay that to HMRC. You must deduct 20% from your subcontractors’ invoices or 30% if they’re not registered themselves with HMRC.

Q When is the return due?               

A Registered contractors must file a CIS return monthly by the 19th of the following month, even if it’s nil, so you’ll need to keep your calendar up to date.

Q When’s the tax payable?             

A CIS deductions must be paid to HMRC along with your other PAYE deductions if any, by 22nd of the month after the date of the return. Where you’ve had deductions made from your invoices you must reclaim them via the payroll.

Q How easy is it to do yourself?    

A Doing CIS returns can be complicated and time-consuming if you’ve got lots of subcontractors.

VAT

Q Who’s it for?                                     

A Any VAT registered business/entity/person making taxable supplies for business purposes.

Q How’s it calculated?                       

A There are many complications with VAT. Certain business sectors or supplies may be subject to different rules. The regulations are worded in such complex language that it’s very easy to misunderstand them.

Q Date return & payment due 

A Most small businesses must prepare VAT returns quarterly. The return and VAT payment are due by one month and 7 working days after the quarter end.

Q How easy is it to work out? 

A Too many businesses make assumptions about VAT that are just plain wrong. HMRC helpline staff often give wrong advice. Get training from your accountant and ask them to regularly check your return to be on the safe side.

SELF ASSESSMENT TAX

Q Who’s it for?                                     

A Most business people and those who have several different sources of income not taxed at source.

Q How’s it calculated?                       

A There are different rules for different types of income. And the rules are continually changing as each chancellor presents a new Budget. There are all sorts of things you might be able to claim against your income to lower your taxes but it’s not clear to a non accountant exactly what these are and how to do things properly.

If a large part of your taxable income is not taxed until your tax return is completed you will probably have to make a payment on account for the next year as well.

Q Date return & payment due

A By 31st January following the end of the tax year.

Q How easy is it to do yourself?

A If you’re running a business or have a rental property it’s not simple to find out the expenses that you could be claiming.

I regularly assist my clients with all these taxes. If you’ve got a query, call me now for help, so you’re not having to second-guess the legislation and won’t pay too much tax. #Finance #Taxes #UnitedKingdom

Frances Conn, Figureweave Accountancy Ltd www.figureweaveaccountancy.co.uk tel: 01737 559211

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