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Taxation

Something taxing your mind?

So many business owners have been there before. Everything piling up at year end, through April and beyond. Then it hits with only hours to spare or even worse if the deadline has already passed. The tedious forms legally enforced by all UK businesses weigh heavily on the minds of those responsible for submitting tax returns to HM Revenue & Customs. It can require enormous amounts of paperwork, which to the inexperienced can be worrying.

Typically, most businesses are concerned with more than just one form of taxation, though some may not apply dependant on how the company is managed:

Income tax

Every business owner is self‐employed and therefore cannot have their taxes administrated via payroll. Submitting a Self‐Assessment Tax Return form is the process where a business owner's personal incomes are accessed by HMRC and require them to pay any Income Tax. Even if you know you won't personally earn a total income higher than your tax‐free allowance in any given financial year, you are legally required to have your personal income accessed by HMRC.

However, employees usually have their personal incomes assessed by a payroll service such as ours and will instead pay their Income Tax via a deduction of their payslip.

Corporation tax

Unlike Income Tax, unfortunately, Corporation Tax doesn't have the concept of a tax‐free allowance. Only an LLP or Limited company need pay and are required to pay 20% of all profit made within that financial year. If any losses have been made a previous year, then HMRC will offset against the current years' profits.

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Accounting
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