Taxes
Business taxes are a broad category that encompasses several different types of taxes that companies and self-employed individuals must pay based on their business activities, earnings, and assets. In the UK, the tax system for businesses is managed by HM Revenue and Customs (HMRC), with specific rules applying to different business structures such as sole traders, partnerships, and limited companies.
”Taxes are a critical part of running a business, funding public services and infrastructure while ensuring a fair economy. Whether you’re a sole trader, partnership, or limited company, understanding your tax obligations is key to staying compliant and successful.“
Business taxes are a critical responsibility for all businesses, ensuring their contributions support public infrastructure and services while promoting fairness in the economy.
In the UK, understanding the various taxes applicable to businesses is essential for compliance, financial planning, and maximising efficiency.
Business Taxes
Corporation Tax
- Paid by limited companies on their profits.
- Current rate: 19% (or variable based on profit thresholds).
- Tax reliefs and allowances, such as R&D tax credits, can reduce liability.
VAT (Value Added Tax)
- Charged on most goods and services sold.
- Standard rate: 20%, with reduced (5%) and zero rates for specific items.
- Businesses with a turnover above £85,000 must register for VAT.
Business Rates
- A tax on properties used for business purposes, calculated by local authorities.
- Reliefs, such as Small Business Rate Relief, may apply.
PAYE (Pay As You Earn) and National Insurance
- Employers deduct Income Tax and National Insurance Contributions (NICs) from employees’ wages.
- Employers also contribute to NICs based on employee earnings.
Self-Employment and Sole Trader Taxes
- Sole traders pay Income Tax and Class 2/4 NICs on profits.
- Personal allowances and expenses can reduce taxable income.
Business taxes can be complex and time-consuming, with strict rules and deadlines that vary depending on the type and structure of a business. Navigating these complexities without proper expertise can lead to costly mistakes, missed deductions, or penalties for late or inaccurate filings.
Our tax professionals, such as accountants or tax advisors, can be invaluable in helping businesses reduce their tax burden and stay compliant.
We identify eligible deductions, tax credits, and reliefs, such as R&D tax credits or Annual Investment Allowance, that businesses might otherwise overlook. Additionally, professionals ensure accurate and timely filings, minimising the risk of penalties and interest charges from HMRC. By offering strategic advice tailored to your business, tax experts not only save money but also provide peace of mind, allowing you to focus on growing your enterprise.
We can help business tax deadlines
- Corporation Tax Return: Due 12 months after the end of the accounting period.
- Self-Assessment: Submit online by 31 January each year for the previous tax year.
- VAT Returns: Typically filed quarterly, depending on VAT scheme.
- PAYE Reporting: Real-Time Information (RTI) submissions required with payroll.
How we help your business
- Tax Planning: Maximise deductions and reliefs to reduce your tax burden.
- Filing Support: Expert assistance with tax returns and compliance.
- Audit Readiness: Guidance to ensure accurate records and reporting.
Business taxes are a crucial aspect of running a company, encompassing various obligations that ensure businesses contribute to public services and infrastructure.
These taxes can include corporation tax on profits, VAT on goods and services, and business rates on commercial properties.
Employers are also responsible for deducting income tax and National Insurance from employees’ wages through the PAYE system, while sole traders and partnerships pay income tax and National Insurance on their earnings.
Understanding and managing business taxes effectively is essential to staying compliant with regulations, optimising financial efficiency, and avoiding penalties.
Proper planning and professional advice can help businesses take advantage of tax reliefs and allowances, reducing their overall tax burden.
