One of the priorities of the British government is to make running a business in the UK as simple as possible. That said, any business in the UK is subject to a lot of rules and regulations. In the majority of cases, entrepreneurs must comply with the requirements for filing annual accounts, including VAT returns, payroll and audits.
If you have any accounting-related issues in the UK, Imperial & Legal experts will provide professional help with the following:
Current law requires all UK businesses to prepare and submit their annual accounts, except for Scottish Limited Partnerships (SLP) which do not have to submit accounts to the Companies House, provided they are only active overseas. However, even if an SLP has nothing to declare, it still has to submit its tax return to the HMRC.
Annual accounts shall be submitted to the Companies House, and tax returns to the HMRC. If you have a limited company, which does not need an auditor, you can file your company accounts and company tax return at the same time.
What will be submitted
Where to submit it
Both
Via the HMRC online service or accounting software
Annual accounts only
On the Companies House’s website
Tax return only
If you want to do it online, you will need your login details for HMRC and Companies House online accounts, as well as your company’s registration number.
As a rule, your annual accounts must cover over 12 months. The accounting period begins the day you register your company. The financial year ends on the last day of the same month next year. For example, if you register your company on 14 April 2021, your annual accounts must cover the period from 14/04/2021 to 30/04/2022, which is 12 months and 16 days.
Unlike your annual accounts, a tax return cannot cover more than 12 months, so you will have to prepare two tax returns to pay the Corporation Tax for the first financial year. Next year you will submit only one tax return together with or separately from your annual accounts. Here are the reporting deadlines in the UK:
Imperial & Legal accountants will prepare accounts and tax returns for your UK business in full compliance with international standards and the accounting practices of your country, and assist with tax optimisation.
As a rule, income tax is deducted from salaries, pensions and savings of UK tax residents. If you have another type of income, for example, shareholding or self-employment income, you must complete and file a Self-Assessment Tax Return.
A reporting period for a Self-Assessment Tax Return starts on 06 April and ends on 05 April of the following year. For example, in 2021, the tax year started on 6 April 2021 and ended on 5 April 2022.
You must submit your Self-Assessment Tax Return and pay the income tax on all the income you received within the reporting period by the following deadlines determined by the UK government:
There are tax exemptions for those who have just become UK tax residents. These considerably relieve the tax burden, especially for those immigrants who get overseas income. If you want to know more about these reliefs, book a consultation with Imperial & Legal financial advisors.
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Small businesses in the UK are not normally required to get audited. Under British corporate law, a company qualifies as small if it meets at least two of the three criteria:
Small dormant companies and businesses that did not have any ‘significant’ transactions during the accounting period are usually exempt from audit. Some charities and subsidiaries are not audited either.
Regardless of the size of your business, you will have to conduct an audit if it is required by the company’s charter or by the shareholders. In some cases, an organisation is subject to an audit for other reasons, for example when it is subject to a public sector audit, when it is requested to do so by the authorities or to procure additional finances (a loan from a bank).
Imperial & Legal specialists will advise whether your business needs to be audited and help you do it.
A business must register for value-added tax if its VAT-taxable turnover is more than £85,000 in 12 months. Most companies register voluntarily before reaching this threshold unless their goods or services are exempt from VAT.
In the UK, the following operations are VAT-taxable:
We offer an Imperial incorporation package to support foreign entrepreneurs who are just entering the UK market. The package includes VAT registration.
Once you have registered for VAT, you will get your VAT certificate containing the following information:
As soon as your business is registered for VAT, you will have new obligations:
As a rule, you must send a VAT return to the HMRC every three calendar months. The deadline for preparing and submitting your return is one month and seven days after the end of an accounting period. Sometimes the HMRC can change the frequency of submitting your VAT returns.
Imperial & Legal’s experienced tax advisors will help you register for VAT, as well as prepare and submit your VAT returns.
All UK businesses that pay salaries to their employees must be registered for PAYE. PAYE is the HMRC system to collect Income Tax and National Insurance from employment.
PAYE stands for Pay As You Earn. The name reflects the way the system functions because Income Tax and National Insurance payments are deducted monthly from an employee’s salary.
As an employer, you may use PAYE to:
The deadline for registering for PAYE is the first payday. It can take two to six weeks, and you cannot register more than two months before you start paying your employees.
Once you have registered, you must submit your returns online, and calculate and pay Income Tax for your employees. Besides, you will have to pay the National Insurance Contribution by the 22nd day (or the 19th if paying by post) of the month succeeding the reporting one.
Please note: even when a business has only one director and they are on payroll (no dividends), the company still has to be registered as an employer. Besides, if you have household staff (gardener, driver, babysitter, etc.) and you pay them, you also have to be registered with the HMRC as an employer and use the payroll system.
Imperial & Legal specialists will take care of all the payroll needs and prepare payslips for your employees.
Annual accounts of a UK business usually include the following documents:
Your business will qualify as a micro-entity in the UK if it meets at least two of the following criteria:
UK micro-entities may file abridged annual accounts and be entitled to the same exemptions as small companies.
If you do not speak fluent English or doubt that you can complete a tax return correctly and answer all the questions the HMRC caseworkers might ask you, you can appoint an agent to represent you.
It is required that your agent is:
The HMRC has a list of criteria your agent must meet. Before they can represent you, they must fill in a form published on the HMRC website or send it by post.
Apart from a tax agent, British law allows you to have:
Imperial & Legal’s specialists will assist you in any issue related to the HMRC as your agents, ‘trusted helpers’ or intermediaries.
No, even if your company’s VAT-taxable turnover passes the threshold, you cannot charge VAT or include it on your invoices until you register for it and the HMRC assign you a VAT number.
However, you will have to pay VAT for the period from when the threshold is passed till you register for VAT. You can avoid losses by increasing selling prices after first informing your clients. As soon as your business gets a VAT number, you can include VAT on your invoices.
You do not have to register for PAYE if:
But even if you fall into this category, you still have to keep payroll records.
The following transactions are not regarded as ‘significant’:
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