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main types of taxes

What are the Main Types of Taxes in the UK?

03/03/2023tax , Tax Issues , Tax News and Tips , Tax Saving Tips , Taxation

It has been observed that the tax code in the UK is most extended since the tax year 2009. It will not be wrong to presume that tax affairs are one of the most complex matters here. This is due to the fact that the tax authorities and system is designed in a straightforward way. One of the main yet difficult parts of tax rules is that even spouses are considered separate entities. Every individual whether living in a civil partnership, married, or single is being taxed individually according to the tax law. Then there are a few exceptions observed as well. As a beginner in tax affairs in the UK, you must gather basic information regarding the main types of taxes in the UK. Moreover, this is imperative to mention here that when you will begin to pay taxes, you will have to go through three different stages. There is the involvement of the central government, local government, and the devolved government. The tax year is on the 6th of April and ends on the 5th of April and it is also known as the fiscal year. Moreover, there are main types of taxes that are mostly implemented for a resident of the UK. We have covered everything related to these types in this guide. Let us get started with the discussion to learn more.   Reach out to our smart and clever-minded guys to get an understanding of the main types of taxes in the UK. We will help to understand your queries instantly.   What are the Main Types of Taxes in the UK? Usually there considered to be six main types of taxes that are implemented on individuals when living as a UK resident. This involves the tax liabilities of paying the national insurance contribution, value-added tax, excise duties, corporation tax, stamp duty, and income tax. The relevant details are explained below for further understanding.   1- National Insurance Contribution National insurance is paid by individuals in the UK to ensure that they qualify for state pension and some other certain benefits from the government. National insurance contribution is mandatory to pay for the ones who are more than the age of 16 and earn to a certain limit. In the case of being self-employed, the profit has to be more than a certain amount to bring in the liability of paying the national insurance contribution. Moreover, there are different classes of national insurance contributions. This explains that not every individual is paying the same amount. The decisive role is played by the amount you earn and what is your employment status in this regard. You must also ensure that there are no gaps in the record of your past payments of national insurance contributions.   2- Value-Added Tax (VAT) Value-added tax is also known as a consumption tax. This tax is also a great source of government income just like the national insurance income tax is. The standard rate of VAT which is 20% is applied to several common things in the UK. The fair of taxis, pushchairs, prams, chocolates and alcoholic drinks are a few examples of which VAT is implemented with a standard rate normally. However, the rates of VAT on the mobility of elders, solid fuel, heating oil, gas, electricity, car seats, and oil is a little lower than other things. There is a category of zero rates items well which includes poultry, meat, fruits, vegetables, and household water. Then comes the things that are exempted from VAT.   3- Excise Duties Excise duty is normally charged on things like vehicles, betting, tobacco, and alcohol. The individuals who are involved in producing these items are also charged excise duty. Normally the excise duty tax is implemented on the final price for sale. The consumer will have to pay the excise duty indirectly to the government in the UK. There is a separate form for the excise duty as well. So it is better to be aware of the standard rates of excise duty to know what exactly are you paying in form of tax indirectly to the government.   4- Corporation Tax A corporation tax is known to be a tax that is implemented on the number of profits of a company. This explains that if you are involved in carrying out business through a limited company, a foreign company that has a UK branch, or any club corporation, you will be liable to pay corporation tax. There is a standard rate of corporation tax as well which could even come down in certain situations. This depends on the kind of business you are carrying out that will decide how much you will pay as a corporation tax for your limited company.   5- Stamp Duty This tax is known as the stamp duty land tax. If you are an individual who is interested in buying a piece of land or a party in the UK that has prices over a certain figure, you will have to pay stamp duty land tax. In the case of buying a first home in the UK, you might get entitled to some discounts in this regard. In some cases of buying the first home, you will not have to pay any tax at all.   6- Income Tax This kind of tax is implemented on your income directly. How much amount you will pay in form of income tax depends on the figure you are learning that is over the amount of your personal allowance. You will have to consider the fact about which tax band you belong to according to your earnings. There are some cases where you can even apply for income tax relief.   The Bottom Line Now that we have gathered a fair amount of information about what are the main types of taxes in the UK, we can bring the discussion towards wrapping up. There are main six types of taxes that are normally implemented according to your unique …

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Reduce Corporation Tax

A Guide Based on Key Ways to Reduce Corporation Tax!

20/05/2022Tax Issues , Tax Saving Tips , Taxation

If a business owner aims to find key ways to reduce corporation tax, he can find more than 100 ways to do so. The will of reducing the taxes will help find a way. In this comprehensive guide, the smart and easy keyways are narrowed down for you which will be really helpful. Especially in the case of owners who carry out small businesses, there are multiple options to do so. If you are in the UK and associated with the business world the chances of reducing your taxes are even higher. There is no need to panic as according to research there are actually 32 ways to reduce the tax with the owners who carry out small businesses. Let’s discuss the most prominent keyways here to make the deadly tax year-end a little relaxing.   Pay Your Civil Partner or Spouse In case you tend to pay your civil partner or your spouse for working without business as a salary. This will come under allowable expense and will save you from the tax bills. Consider the following ways to make it possible: Your spouse or civil partner earns an amount that is less than the amount of income tax-free allowance. The process will be free of tax and the amount goes straight into their pockets. This will help to grow family wealth and reduce taxes. So get ready to treat your family to some family trips with this smart earned amount. Moreover, in the case of a family member having shares in the business, he can additionally get the tax-free amount of dividends. This way makes it possible to extract some amount from your limited company and pay no tax on it. Furthermore, it is important o follow the right share structure for your business if you want to avail such benefits from the company.   Our young and qualified team of professionals can actually give easy solutions to your tax problems. So pick up the phone and reach out to us now for instant help. Call us on 02086868876 or email us today.   Gift Shares to Family It is to be considered that while you decide to gift shares to any of your family members, there is the possibility of tax implications. However, this is still worth doing as you will definitely be in a win-win situation.   Employ Your Children Several people who are even carrying out their own business are unaware of this option and the possibility. This is important to know that your child should be over the age of 13. Some conditions for the working hours have to be followed as well as the child has to practically do some work for your business. Furthermore, a fair commercial rate can be given to the child. There can be a discussion on if you are paying your children, should it be a tac deductible amount or not.   Pension Contributions For those who are tired of dealing with the high tax rates, this one is the best solution to go with. The contributions we make for pensions are normally free of tax.   Business and Personal Assets Sometimes the businessmen use their own personal assets for the business. In order to reduce the tax liability and there is a possibility to make a claim. The example of such businesses where you are using your gadgets like laptop and mobile phone is considered as personal assets. You can make a claim for this personal asset.   Wrapping Up Finally, the discussion of ways to reduce corporation tax can be summed up as the important information is well gathered and discussed in the guide. Dealing with taxation is often considered a complicated process, business-related individuals usually seek professional help to get rid of paying high amounts for tax bills. We hope these few minutes of reading will further help to make smart and accurate choices to save your amount from paying taxes over the end of the financial year.   If you are looking for a helping hand to talk about taxation, we offer a one-hour free consultation. Call and discuss your requirements with us for an instant solution.    Disclaimer: The information about ways to reduce corporation tax provided in this article is general in nature. It does not intend to disregard any professional advice.  

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Corporation Tax for A Limited Company

Corporation Tax for A Limited Company, How Much Is There To Pay?

03/09/2021Dividend Allowance , Limited Company , Tax Issues

If you are running your business as a limited company, you must pay corporation tax. Limited corporation’s tax rules are different from other corporations to some extent. Therefore, in this blog, you will know the corporation tax for a limited company, how much corporation tax needs to be paid, and what expenses you can claim capital tax allowances.   Are you looking for an accountant to help you manage your finances? Please do not hesitate to contact us! CruseBurke accountants provide tax services at a reasonable cost!   Types of Taxes to be Paid by a Limited Company? Following are the taxes that need to be paid by a limited company. Corporation Tax National Insurance Contributions (NICs) Value Added Tax (VAT) In this blog, we will cover corporation tax for a limited company.   Corporation Tax for a Limited Company If you are running a limited company, you must pay corporation tax on your company profits. The current rate of a corporation tax is 19%. Corporation Tax is levied on a company’s trading profits, the sale of taxes, and investments. When establishing your limited company, you must register yourself for corporation tax with HMRC within the first three months of trading. Late registering may result in a penalty of fees. So, registering for corporation tax must be your priority.   How much Corporation Tax to be paid by a Limited Company? The rates of corporation tax to be paid by a limited company in 2021 is as follows: The “main rate” for the companies, making profits except for ring fence profits, is 19%. The standard rate for the unit trusts and open-ended investment companies is 20%. You can check more information about the rates here!   What Expenses are Eligible for Capital Tax Allowances? When working out how much charge you owe, a few Corporation tax stipends are available for your company. When you prepare your accounts, you can deduct your business expenses from the trading profits before tax. Capital tax allowances can only be claimed on the “entirely and exclusively” expenditures incurred for business purposes. Some costs which are qualified for capital tax allowances are: Machinery & equipment Vehicles Accommodation Mileage Training Remember that these expenses must be incurred for business purposes, and you can not claim capital tax allowances for the costs used in entertaining clients.   Dividend Taxation for Limited Companies In case your local company has made a benefit after taking away trade costs and enterprise charges (corporation tax), it can give out these profits to its shareholders with something called a ‘dividend’. You’ll only pay shareholders a profit (dividend) in case you’ve got good benefits. Dividends are not charged in the UK, but the shareholders who gain them may be subject to income tax and NICs(National Insurance Contributions) depending on their personal tax allowance. However, when they complete their annual self-assessment, this will become clear. The tax rates can be changed yearly for limited companies, and it can be troublesome to decide (exactly) what your tax liabilities are. However, you can take help from the tax accounting apps to understand your tax liabilities and manage your finances.   Final Thoughts To conclude our overview of corporation tax for a limited company, we can see that limited corporations benefit from being exempt from income tax. However, there is no way to avoid corporation tax, NICs, and VAT. You need to pay the corporation tax on your trading profits. Besides this, you can claim tax reliefs on corporation tax. Many tax reliefs are available to reduce your corporation tax bill, such as Research and Development relief, Creative industry tax relief, The Patent Box, Marginal Relief, Disincorporation Relief, etc. Moreover, you can reduce the corporation tax bill if you make wise strategies about the dividend payments (that directors take from the business) and salary as you can not avoid your taxes, so it’s essential to remain up-to-date about your tax duties while remaining tax efficient.   Unable to claim corporation tax reliefs on your taxes? Let us handle this! We are qualified chartered accountants that can claim your tax relief and manage your taxes in no time!   Disclaimer: This blog contains general information about Corporation tax for a limited company.

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Company Tax Return

How to File Company Tax Return!

30/08/2021Limited Company , Tax Issues

All limited companies in the UK need to file a company tax return at the right time. In today’s blog, we’ll have a look at what is a company tax return, how to file it, when you need to file it, and what are the penalties for late filings. Here’s all you should know as a limited company owner.   What is a Company Tax Return? A company tax return (form CT600) is the financial information that includes spending, profits and corporation tax figures reported to HMRC annually. You can also report it to find out how much corporation tax you have to pay. It contains the following documents: Form CT600 Company’s annual accounts Calculations of the company’s tax Any supplementary documents If a company received a notice from HMRC to complete a tax return, then a company must do it as early as possible. It typically happens after the year-end. The deadline for filing a company’s tax return is a year (12 months) after the end of its accounting period.   Get inclusive accounting, bookkeeping, tax, and company formation services with our qualified accountants at an affordable rate. Get in touch today!   Filing a Company Tax Return To file a company’s tax return, you need to ensure that you have: Company’s statutory accounts (annual accounts) that are balanced means your total assets should match with your total liabilities and shareholders’ equity The government gateway ID and its password. If you don’t have one, you need to create it to use the service Your Companies House password and authentication code (in case of filing your accounts together). You can get these when you register with Companies House You can use the paper form (CT600) if: You have a valid reason for not filing online You want to file in Welsh And, you need to complete and post form WT1 to describe the reason behind using the paper form. To file your accounts with Companies House and the Company Tax return with HMRC. You need to have online account details of HMRC, Companies House online account details, and company registration number. Here is what you need to do as per your situation: If you want to file accounts and tax returns together, you can use HMRC’s online service or CruseBurke‘s services If you want to file your accounts with Companies House separately, you can send your accounts to Companies House online or Contact us to do it on your behalf If you want to file a tax return with HMRC separately, you can use HMRC’s online service or our services to do it Note: You’ll only need to prepare and file your Company Tax return yourself if you’re fully confident to do it. Otherwise, you might get in great trouble. So, taking the services of an accountant is worthwhile for the accuracy and efficacy of your return.   If you need the help of an accountant or tax expert, contact our qualified accountants at CruseBurke!    Deadlines for Completing Return To file a return and to pay taxes, you need to follow the below-mentioned deadlines: The return needs to be sent to HMRC within 12 months after the year-end Any Corporation Tax due must be paid within 9 months and a day after the end of the accounting year Suppose, a company’s accounting period is ending on 31 December 2019, it needs to pay any Corporation Tax that is due by 1st October 2020 and file the return by 31st December 2020. Generally, these are filed together. In case of filing them late, your company needs to pay financial penalties.   Penalties for Late Filing On missing the deadline of the return, you need to pay fines. If you’re: One day late, you need to pay a £100 penalty Late for three months, you need to pay another £100 penalty Late for six months, you need to pay an additional/extra penalty of 10% on your corporation tax bill. A year late, you’re levied another 10% penalty on your estimated corporation tax bill On filing a return consecutively late for three times, the £100 penalty will increase to £500.   Quick Sum Up So after reading this post, you have understood: what is a company tax return, how to file them, when you need to file them, and what penalties you need to pay in case you file them late. Bear in mind that only limited companies need to submit it. If your company is dormant for corporation tax, you don’t need to submit it. Moreover, sole traders and partnerships also don’t need to submit a return but their earnings are reported to HMRC.   Turn to CruseBurke for preparing and submitting the return and save your time, money, and stress. We have a team of skilled accountants who will handle everything with HMRC and Companies House on your behalf. Contact us right away!   Get an instant quote for a tailored offer at a fixed fee!   Disclaimer: This blog is written for general information on the company’s tax return.  

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