Taxes

The UK tax system is very complex and this site will in no way attempt to educate you on all of the intricacies of each of the taxes.

However we do plan to give you a bit of an overview so you are aware of the terms.

Income Tax

Income tax is paid by individuals in all income where ever it may arise e.g. salary, interest, rent, dividends etc.

The income tax year runs from 6 April to 5 April each year.

Where applicable individuals would complete a self assessment return to record their income and the amount if income already paid.

The return would be used to calculate any additional tax to pay or in some cases where a refund may be due.

Corporation Tax

This is the tax paid by limited companies on the profits made by the company.

A company would complete a corporation tax return (CT600) and would need to send this along with accounts and a full tax computation (calculation) to HMRC.

PAYE

PAYE (Pay as you earn) is a system of collecting income tax and national insurance from your wages, salary or occupational pension. This means that such amounts are received net of tax.

If you are an employer you will need a suitable payroll system that can calculate any income tax and national insurance due on your employees wages and salaries.

There are many returns which have to be filed by an employer. So if this is an area that you are not familiar with, it is strongly recommended that you get expertise advice or attend a course on the subject.

VAT

VAT is a tax charged on most transactions in the UK.

When your business reaches a certain threshold then it will have to register for VAT.

This means from the date of registration you:

must charge vat on all your relevant sales
you can reclaim vat where you have been charged it on your purchases

Basically you become an unpaid tax collector for HMRC as you pay to HMRC the VAT that you have charged on your goods or services less the VAT you have paid on your purchases.

Other Taxes

There are many other taxes payable in the UK for example capital gain tax (CGT), Inheritance Tax (IHT) etc.

As these are specialist area it is suggested that expertise advice is sought on these taxes from a qualified accountant or suitably qualified tax specialist.