Which taxes do limited companies in the UK need to pay?

In a limited company in the UK, it is the responsibility of the company directors to ensure that taxes are paid. Businesses will usually require the help of an accountant to ensure they abide by the law, but, to give you a better understanding of what needs to be paid and when, here's a brief overview of how tax laws in the UK work for limited companies:

 

VAT
VAT is slightly different to other UK taxes as your business has to register as a supplier and charge VAT on the products or services it sells. In return, you will be able to reclaim VAT on the products you purchase. If your business makes supplies of more than £85,000 a year in any 12 month period, you may need to register for VAT.

Corporation tax
As of April 2017, companies pay corporation tax at a rate of 19% on profits made. If your business has profits of less than £1.5 million per year, you'll need to have paid your corporation tax bill nine months and one day after the end of the financial year. Businesses with profits over £1.5 million pay their bill in instalments. Corporation tax can be paid in a number of ways - for further details, please consult https://www.gov.uk/pay-corporation-tax

Dividend tax
If you receive more than the tax-free allowance on dividends during any given financial year, you will have to pay tax on the amount exceeding the allowance. The limit is currently £5,000, but this will be reduced to £2,000 from April 2018.

Income tax
Employees earning over £11,500 a year will need to pay income tax on any amounts earned above this. Many limited companies incorporate a PAYE system which deducts income tax at source. If you are a director of the company, then you will need to factor any income earned from the limited company into your annual self-assessment.

National insurance contribution
National insurance is paid by anyone between the age of 16 and the state pension age who earns over £157 per week. The limit if you are self-employed is £6,025 a year in profit. For more information on national insurance contributions, please consult the https://www.gov.uk/national-insurance/how-much-you-pay dedicated government page.
Most businesses employ the services of an accountancy firm to assist them in keeping track of their taxes. If you are considering hiring an accountant and would like to find out more about how they can help make the process of filing your taxes more straightforward, get in contact with us today.

To discuss tax for your limited company in Sussex & the South East, get in touch with our Tax Partner Robin using the details below:

Robin Stevenson

email: robins@swindellsaccounting.co.uk

Tel:  01825 745945