Taxes in the UK: A Guide for Limited Companies

Editor’s note: Originally published on 6 November 2022; this article reflects information available at that time, and rules may since have changed.

Corporation Tax

A UK limited company normally pays Corporation Tax on its taxable profits. The calculation starts with income and allowable business expenses, then applies tax adjustments, reliefs and the rate relevant to the company.

VAT

VAT registration can be compulsory when taxable turnover exceeds the current registration threshold. Some businesses register voluntarily, while special rules can apply to non-established businesses, online sellers and cross-border transactions.

PAYE and National Insurance

If the company employs staff or pays a director through payroll, it may need a PAYE scheme. Payroll reporting and payments are generally made during the year rather than waiting for the annual accounts.

Tax on dividends and personal income

Corporation Tax belongs to the company. Directors and shareholders may separately pay personal tax on salary, dividends or other income they receive. The most efficient mix depends on residence, other income and current allowances.

Key filing responsibilities

• Annual accounts and a confirmation statement for Companies House
• A Company Tax Return and payment of Corporation Tax to HMRC
• VAT returns, payroll reports or Self Assessment returns where relevant

Good records and timely advice are essential because different deadlines apply to different filings and payments.

Leon Advisers provides ongoing UK accounting and tax-compliance support. Email info@leonadvisers.com.