It’s vital to keep full and accurate records of your income and expenses from the start. Keeping records makes sound business sense and is a legal requirement. So it’s important to get a proper system in place from the outset, and update the information regularly. Also, keeping records is important as a penalty may be due for not taking reasonable care with records and tax returns.
You'll need to keep at least:
For more information about taking reasonable care, you may find the following resources useful:
Whether trading as a sole trader or a limited company, it is important to keep proper and comprehensive business records so that any reliefs available can be claimed.
National Insurance contributions are paid by almost everyone who works for a living and go towards paying for pensions, benefits and healthcare.
If you are self employed there are two types of national insurance contributions you should know about.
Class 2 National Insurance contributions.
Most self-employed people have to pay Class 2 NIC but in certain circumstances you may be exempt from paying. Your Class 2 NIC payments will become due on 31 January and 31 July, the same as a Self Assessment tax bill.You pay Class 2 NIC at a fixed amount, either monthly or six monthly by Direct Debit.
You pay Class 4 NIC if your annual taxable profits are over a certain amount. In certain circumstances you may be exempt from paying. You pay Class 4 NIC at the same time as your Income Tax if you’re self-employed or in a partnership.
Managing tax and accounts for limited companies can be complicated. We are here to offer you these services.
If you are running a limited company then you may need to pay Corporation Tax. Corporation Tax is a tax on your company’s overall taxable profits.There is a lot to know about Corporation Tax and many people choose to use an accountant to help them manage this. We are here to help you.
All Company Tax Returns must be filed online and you must pay your Corporation Tax and related payments such as interest or penalties electronically. If you file your return late, you may have to pay a penalty. If you pay your Corporation Tax late or don’t pay enough, you’ll be charged interest.
These deadlines are for private limited companies.
If you are self employed you’ll pay Income Tax on your taxable profits, through Self Assessment. You may also need to pay National Insurance and capital gains tax.
If you employ someone – even if it’s only yourself, as a director – you’ll have to operate PAYE (Pay As You earn) on their earnings. You’ll need to register as an employer with HMRC
A tax year runs from 6th April to the following 5th April. After the tax year ends on the 5th April, you will need to complete a Self Assessment tax return, which you can either do online or by filling in a paper form.
If you complete a paper tax return you need to make sure HMRC have received it by 31 October. You may be charged a penalty if your paper return is received after this date.
If you choose to do your tax return online, you need to make sure HMRC have received it by 31 January the following year, giving you an extra three months. There is an automatic penalty for filling your return late of £100.
Whether you complete a paper tax return or choose to do it online, you also need to pay any tax you owe by 31 January. If you pay your tax late, you will be charged interest from the date your tax was due and may be charged penalties.
19% on all profits below £300,000
19% on all profits above £300,000
The company tax year starts on 1 April.
|Income Tax Band|