Otherwise known as an Annual Self Assessment is a means of declaring your income, costs and profits to HMRC, for anybody that earns income outside of the PAYE system. Once your full income for the year has been established, with costs and any tax deducted at source omitted, the tax due on your taxable profits can be calculated.
When does my Self Assessment need to be completed by?
The tax year runs from 6th April to 5th April each year. The Self Assessment and any tax due to HMRC must be submitted by the 31st January of the following year by online.
What happens if I am late submitting my return and/or payment to HMRC?
HMRC will charge you a financial penalty.
What is VAT?
VAT (Value Added Tax) is a tax that’s charged on most goods and services that VAT-registered businesses provide in the UK. VAT is charged when a VAT-registered business sells to either another business or to a non-business customer. When a VAT-registered business buys goods or services they can generally reclaim the VAT they have paid.
When must I register my business for VAT?
Although there is slightly more to it, but if your turnover for the previous 12 months has exceeded £77,000, then get professional advice as it is likely that you must now register.
Can my business register for VAT even if my turnover has not hit the required level?
Yes, voluntary registration is common, but it only benefits certain types of businesses, for instance those who sell zero rated items, but buy standard rated items. A refund can be claimed from HMRC, which has obvious cash flow advantages.
What is the Construction Industry Scheme?
The Construction Industry Scheme (CIS) sets out the rules for how payments to subcontractors for construction work must be handled by contractors in the construction industry.Both the contractor and the subcontractor have to register for CIS and there are certain requirements that need to be followed, such as monthly subcontractor returns.
How does the tax work under the Construction Industry Scheme?
Upon a contractor issuing work to a subcontractor, the contractor will check whether the subcontractor is CIS registered. At this point, the contractor finds out what level of registration the subcontractor has. When a subcontractor invoices the contractor, a percentage of the labour (does not apply to materials) is deducted before paying the remainder of the invoice. This is typically 20%. The contractor pays the amount deducted to HMRC on a monthly basis. At the end of the year, any tax paid by the subcontractor in this manner, is deducted from the amount paid through Self Assessment, as is has been “deducted at source”.
What is Corporation Tax and what types of businesses need to pay it?
Corporation Tax is a tax on the taxable profits of limited companies and other organisations including clubs, societies, associations and other unincorporated bodies.
Are there any deadlines with regards to Corporation Tax?
Yes, the requirements to comply with HMRC regulations are generally that you must pay your Corporation Tax bill within 9 months of the end of your financial year, and then file your company Tax Return within 12 months of the end of your financial year. If you miss the deadlines your company may be charged interest and/or penalties.