Publications 

This is our resource place full of important and useful information. 

Limited Company (LTD)

 

Limited company, apart from sole traders, is a most popular business structure in the UK. The liability of company directors is ‘limited’ in that the company’s finances are separate from personal finances, which is not the case for sole traders.

There are some high level requirements which all limited companies must fulfil:

  • The company must be registered at Companies House.

  • The company’s annual statutory accounts must be filed at Companies House

  • Annual Return must be completed each year to ensure Companies House records the most up-to-date information about the company. This is subject to a modest annual fee.

  • HMRC must be informed if the company has any profits or taxable income on an annual basis.

  • Every limited company must complete an annual corporation tax return. Any liabilities must be paid within 9 months of the company year end.

  • All company employees must pay income tax and NICs on any income they receive.

Tax & National Insurance for Sole traders

As a sole trader or partnership, your business income is counted alongside any other personal income you have for tax purposes, so accounting is relatively straightforward.

Your tax is calculated via the annual self-assessment process. You will have to pay income tax and National Insurance Contributions (NICs). Any losses you make can be offset against your other income. Sole traders also have to pay Class 2 NI contribution. When you fill in your annual self-assessment form, HMRC will calculate any Class 4 NICs you have to pay on your business profits.

Tax year in the UK ends on the 5th of April and any person that is self-employed or in a partnership is obliged to prepare and file tax return to HMRC as well as pay any tax owed by the following dates: 

  • paper tax return must reach HMRC by midnight on 31 October

  • online tax return online must reach HMRC by midnight on 31 January

Not meeting those deadlines results in automatic penalties from HMRC.

Construction Industry Scheme (CIS)

 

CIS is a special system set up by HMRC which sets out the rules for how payments to subcontractors for construction work must be handled by contractors in the construction industry. As CIS contractor, you must:

  • Register for CIS scheme

  • Verify the registration details of your subcontractors with HMRC

  • Deduct tax from the subcontractors’ pay at the correct rate

  • Provide a related parties payslip to each CIS subcontractor

  • Pay any tax due to HMRC together with a return every month.

     

As a CIS subcontractor you must register with HMRC to receive payments with tax deducted at 20%. Unregistered subcontractors have to pay tax at 30%.