If you’re a UK-based small business owner and you’re wondering how to file your taxes, here’s a complete guide that walks you through everything you need to know.
Filling out your tax return can feel like a daunting task, but it is a necessary part of running a business, and it is important to get it right.
So if you are wondering how to file taxes, here’s a guide on how to do your business taxes.
Employers’ PAYE tax
If you are the employer, you’ll need to be aware and up to date with this tax payment. Your PAYE bill will contain:
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- An employee income tax deductions
- Class 1 and 1B National Insurance
- Construction Industry Scheme (CIS) deductions
- Apprenticeship levy payments
Use HMRC’s payment page to get started with your Employers’ PAYE tax bill.
They have included a handy timeline for how you will need to make your payment, depending on how close to the deadline you are.
You must pay your tax bill by:
- 22nd of the next tax month if you pay tax monthly
- 22nd after the end of the next quarter if you pay taxquarterly
Check you’re all set up for PAYE with HMRC using their PAYE and payroll hub.
You can also use the page to get started with your payment, and there are the Employers: general enquiries page for any questions or concerns.
Income tax is the tax you pay on your income, and not all sources of income are taxable, but you will pay Income Tax on things like:
- employment earnings
- self-employed profits
- rental income
- benefits from your job
- income from a trust
- interest on savings
- dividend income
- capital gains
- foreign source income
There is a certain amount of income tax relief available, and you won’t have to pay any on the first £1,000 of your self-employed income.
Check HMRC’s Income Tax page for more allowances and reliefs.
Usually, you can pay income tax through Self Assessment. You will do this by filling in a tax return every year.
You will be paying your Income Tax through Self Assessment, so these are the deadlines for self assessment tax erturn filing you need to note:
- 31 January for online tax returns
- 31 October for paper tax returns
Remember, you are filing your tax return for the previous tax year, not the one you are currently in and every tax year runs from 6th April to 5th April.
You will need to pay this tax on profits from doing business as:
- A limited company
- Any foreign company with a UK officeor branch
- Aco-operative,club or other unincorporated association
You won’t get a bill for this Corporation tax, so it is up to you to work out and pay this tax.
The best place to start this by registering, using the HMRC’s website.
Once you have registered, head to HMRC’s pay your Corporation Tax bill page.
There is lots of information here, and it will direct you to the government gateway log-in page, where you will make the payment.
The filing deadline for filing the company tax return is 12 months after the end of your accounting period.
There is a separate deadline for payment that is 9 months and a day after the end of your accounting period.
The accounting period is usually your financial year, but you may have two accounting periods in the year you set up your company.
Head to HMRC’s hub page to get started.
Because there is no bill, deadlines and keeping on track can be very tricky, so do read through the guidance on appointing an accountant, or call the helpline.
VAT(Value Added Tax)
If your business sells services and products, you may need to start charging your customers VAT. You will then pay any VAT due to HMRC and submit VAT returns.
The standard VAT rate is 20%, although some services and products will have reduced or even zero rates, or be exempt.
You can register your small business for VAT at any time, but if your annual turnover is above £85,000, you must register for VAT without delay.
All payments of VAT will need to be made electronically, and you cannot usually pay by cheque.
You will need to make sure your payment reaches HMRC on time, to avoid a surcharge, use HMRC’s calculator to work out your timeline.
When you are ready to pay the VAT, use the VAT payment page to get started.
In most of the cases, the deadline for submitting your VAT return and making the payment is the same – one calendar month and 7 days after the end of the accounting period.
The deadline will be shown on the VAT return, and you will find your VAT return in your VAT online account.
Try HMRC’s VAT index for guidance on a range of VAT topics, from charging and correcting errors to paying and reclaiming.
For specific questions, HMRC runs a VAT general enquiries, or you can use the guidance specifically for VAT services.
The National Insurance
You pay NICs to qualify for State Pension and certain government benefits.
Your NICs depend on the type of business you are running, and whether you have employees in your company.
If you are a limited company owner, you may also be your own employee and need to make Class 1 NICs through the PAYE payroll or, if you are a sole trader, you will pay Class 2 and Class 4 NICs.
If you have employees, you will need to pay NICs when you pay salaries.
Limited company owners will make National Insurance Class 1 payments through their own PAYE payroll.
And sole traders making Class 2 and Class 4 NICs will usually do this through Self Assessment.
That depends on the company structure. A Sole trader will make their NICs through Self Assessment every year, so the 31st January deadline applies for them.
For limited companies, you will need to keep up to date with your PAYE arrangements, ensuring that NICs are factored into this.
Start with HMRC’s National Insurance hubpage for general information, and headto National Insurance general enquiriespage for queries and problem-solving.
If you are using the non-domestic property for your business – such as a shop, office, or holiday rental/guest house – you will probably need to pay the business rates.
You will also need to factor this in if you are using a building for non-domestic purposes. Use HMRC’s table to get ahead and estimate your bill.
You will receive a bill from your local council in February or March each year which will be for the upcoming tax year.
The deadline will depend on the individual council and will show on your bill.
Go to HMRC’s website for their business rates hub page and the help page for queries.
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Final thoughts on how to file our taxes
If you decide to do tax yourself, but are still not sure of anything, keep in mind that you can always contact HMRC. This is worth doing because if you do your tax return with an error, you could be subject to fines and penalties.
It is also beneficial to hire accountants in London who can guide you through the procedure.