Here's an overview of the taxes you and your company may be liable for along with due dates from the experts at the UK200 Group:
Depending on how you run your company and draw income, you or your company will be liable for some or all of the following taxes:
Corporation Tax: This needs to be applied to limited company proﬁts prior to the distribution of dividends.
Income tax: If you pay income tax on a salary, it needs to be included in your Self-Assessment tax return. This is generally paid via two payments on account, the deadlines for which are 31st January and 31st July of each year.
National Insurance Contributions (NICs): If your earnings are above the NIC threshold (£8,424 in 2018/19), you and your company will be liable for employee's NICs and employer's NICs respectively.
Dividend tax: This is a tax applied to dividends and needs to be declared in your Self-Assessment tax return at the end of the year.
Value Added Tax (VAT): You can charge VAT on your invoices and pay VAT on company expenses. You need to report this quarterly.
Making Tax Digital (MTD)
With Making Tax Digital (MTD), HMRC is looking to phase in digital reporting of taxes, which could turn the traditional tax calendar on its head. The regime will require businesses to maintain records of income and expenditure via digital accounts and report to HMRC on a quarterly basis. This will be in addition to an annual statement.
Tax – the key dates for your diary
6th April: New tax year begins
31st July: Due date for second payment on account
31st October: Deadline for paper Self-Assessment tax return
31st January: Deadline for online Self-Assessment tax return and first payment on account
Your company will also have a financial year depending on when you begin trading. For example, your financial year might span from 1st July to 30th June the following year.
You also have an accounting period for Corporation Tax, which in most cases will match your financial year. Your accounting period is the time covered in your Company Tax Return Form CT600, which needs to be filed within 12 months of the end of the accounting period. On top of this, you usually submit a VAT return to HMRC every three months.
This extract was taken from the practical guide to 'Running a Limited Company', where you can find out more about each of the taxes described above. It was reproduced with permission from UK200Group and written by experts in the UK200 Freelancers & Contractors Group. Find out more about the UK200Group here: https://www.uk200group.co.uk/
It's worth taking advice before you start work to ensure you set up and maintain your accounting records, including expense receipts, in the right way. Set up costs can also be tax deductible under certain circumstances. The experts from the UK200Group explain more:
As a contractor, you'll need to budget for tax, insurance, professional fees, pension and for periods where you aren't earning such as holidays and sickness.
Here's your guide to budgeting for your limited company, from the experts at the UK200Group: