The Tax Deadlines You Need To Be Aware Of

The Tax Deadlines You Need To Be Aware Of

 

REPORTING DEADLINES:

Sole Trader 31/01 following end of trading year 5th April
Limited Company Statutory Accounts: 9 months after the end of the first trading year.

CT600 (Corporation Tax Return): Filing 1year after first trading year. Payment due 9 months after the end of the first trading year.

Confirmation Statement: Due on the anniversary of incorporation. Annually. 

VAT 1 month and 7 days after the end of the VAT quarter.
PAYE 22nd of the following month.

One of the biggest decisions you will have made when setting up your company is determining the correct business structure. Depending on your business structure, you will need to be aware of a differing range of tax deadlines you need to meet throughout the year. 

For all accountants in Bristol and across the UK, these dates a hugely important.

Below we have put together the most important deadlines for sole traders, limited companies and VAT/PAYE registered entities. 

Sole Trader

Operating as a sole trader, or registering as self-employed,  when you first set up your business is inexpensive, avoids a lot of red tape and is quick to set up. Once you have registered however, it is important to know that as a sole trader, you and your business will be taxed as one single entity.  As a sole trader your profits are taxed the same way as any other income by HMRC, which also means that any debt is accountable to you personally.

The tax payable as a sole trader is based on accounts made up to the 5th April and is due on the 31st January. The importance of getting your reporting in before the deadline cannot be overemphasized, as the penalties faced for missing this deadline can be severe.

Time after 31 January deadline Penalty

 

1 day £100 penalty
3 months £10 daily penalty for up to 90 days (maximum £900)
6 months 5% of tax due or £300 (whichever is greater)
12 months and later 5% of tax due or £300 (whichever is greater)

Source: Crunch

The maximum penalty you may face can reach up to £1,600 per year.

VAT Registered

If your business entity is turning over more than £85,000 annually you will need to register for VAT. If, for whatever reason, you have exceeded the £85,000 and have not registered for VAT, HMRC may back charge you for the amount over £85,000. 

The VAT return is a quarterly tax return that, while crucial, is often time consuming, complicated and can cost the company dearly if submitted late. When you register, you’ll be sent a VAT registration certificate. As well as confirming your VAT number, this will also let you know you when you need to submit your first VAT return and payment along with your effective date of registration. The deadline for online filing will normally be one month and seven days after the end of your VAT accounting period.

You will need to make a VAT return every quarter depending on when you first registered. So, for example, if you registered on the 1st January the first return will be made up to the 31st March and will need to be submitted and paid by the 7th May (exactly one month and seven days after regardless of when you have registered).

There will be subsequent VAT returns up to the 30th June, 30th September, and the 31st December.

Most VAT registered businesses will also need to follow the rules for ‘Making Tax Digital’.

In order to make this as time efficient and painless a process as possible, we recommend getting a good accountant to keep you on top of your books and help you to stay on top of your financial obligations.

 

PAYE

If you register as an employer, you will need to make PAYE and national insurance contributions. This return can be done monthly, or quarterly if you pay less than £1,500 per month and must be submitted and paid by the 22nd of the next tax month.

Late monthly and quarterly payments will result in daily interest that will continue to build up on all unpaid accounts from the due date to the date of payment.

Limited Company

Choosing to run your business as a Limited Company has many advantages to it, particularly In terms of its tax efficiency and limited liability, ensuring the security of your personal assets should your business go through hard times.

One of the key components of registering as a limited company is that your business is classed as a separate entity to you. Corporation tax needs to be paid on profits.

As the director of a Limited Company, you will have certain legal responsibilities including taking care of various forms and returns. Filing your confirmation statement (annual return) is a way for Companies House to confirm your company’s data and is not to be confused with your annual accounts. You must file a confirmation statement at least once per year and it can be done either online or by post.

Additionally, your limited company will need to file annual accounts with a deadline of 9 months after your company’s financial year ends.

The Corporation Tax Return (CT600) is a return filed with HMRC once a year, that includes details about your company’s income and is due 12 months after your first year end. This, paradoxically, needs to be paid 9 months before the years end.

Again, as with other business structures, the penalties for late returns or missed deadlines can be significant. Here at Lite Tax, we always err on the side of caution, and whether its helping you with your VAT returns, managing your payroll, or completing your bookkeeping, we aim to provide the best service for you and the financial health of your business.


Accountant

What is Making Tax Digital and What Does It Mean For My Business?

What is Making Tax Digital and What Does It Mean For My Business?

 

The way small business owners deal with their taxes is going to change, and here at LiteTax we’re here to tell you that this doesn’t have to be a difficult or time-consuming process. LiteTax is an accounting firm in Bristol and our clients are asking about this all the time. With the right information and hands-on help, the transition to the digital future of tax can be handled smoothly and efficiently, reducing the amount of time, effort and stress it can currently take to handle your tax accounts.

With that in mind, here are five important facts about Making Tax Digital that your business needs to know about.

1- What is Making Tax Digital?

Making Tax Digital is a government initiative that affects all businesses and some individuals. Essentially, it’s exactly what is says on the tin. If you are VAT registered you will now need to record this online. It is important to know that this is now compulsory, and as of the 1st of April 2019, you, or your accountant, will have to comply with this new regulation and supply this information to HMRC electronically.

2 – Why is HMRC introducing it?

There are several key reasons HMRC have implemented Making Tax Digital, but the most important factor behind the initiative is that it will simply make tracking the tax you owe, or are owed back, a great deal more efficient. In a similar way to online banking, taxpayers will be able to keep track of their taxes in a secure, easy to understand way.

3 – Can Making Tax Digital benefit my business?

Absolutely. While moving to a new online system can seem quite daunting, or simply bothersome, there are some major benefits to filing your taxes electronically.  First and foremost, you will be bypassing a lot of the stress and effort associated with physical bookkeeping, and with paper-based book-keeping a thing of the past, human error will also be left behind, resulting in a highly accurate and time-efficient system for your business. Reducing the paper usage of your business is also an added bonus for the environment!

4 – Is there a specific time-frame for my business?

HMRC’s vision to digitalise the UK tax system was initially designed to be staggered over a period of two years. When Making Tax Digital was first designed, the proposed timelines were as follows:

April 2018 – Income Tax and NICs reporting for unincorporated businesses and landlords with turnover above the VAT threshold

April 2019 –  Income Tax and NICs reporting for unincorporated businesses and landlords with turnover below the VAT threshold. VAT Reporting for all businesses registered for VAT

Apri 2020 –  Corporation Tax submissions for all relevant businesses.

This proposed timeline is still being rolled out, and is likely to go into 2021. So do please be aware that the above dates could change – and it is important to keep up to date with the latest news about Making Tax Digital, please click here to follow our facebook page.

5 – Who can help me make the move to digital?

While we have outlined the benefits of Making Tax Digital, we appreciate that moving into the digital era can be challenging for some people, particularly if you are unsure of the software or tools you may need to get this done. HMRC will not be offering software to help small businesses report quarterly, so in order to help manage your accounting it is a good idea to get some help and advice from a qualified accountancy practice to help you through these changes and move your business into the digital age.


Making Things Easier for You – Digital Accounting

Making Things Easier for You – Digital Accounting

Think of the scenario, your statutory accounts are due in two weeks. Your accountant has been bugging you for the last 6 months to give you invoices and bank statements, half of which the dog has eaten, and you are suffering with the flu as it is January.

The bugbear of all of our business lives is storing information and being able to retrieve it when needed. 

What if your accountant had the information before you even realised, he had it and was able to keep you posted on exactly what your financial position was?  Welcome to digital accounting.

 

Information is automatically downloaded from your bank account to your accounting software.

Invoicing can be done anywhere, using your mobile phone whilst at the same time those receipts are captured automatically using the same phone. Point and snap.

Collecting the information that easily allows your accountant to produce real time accounts after the payroll has been completed. 

Our packages for simple Limited companies start from a little over £120 per month plus VAT (including simple versions of the software). If you are interested in finding out how this works phone Lite Tax on 01275 217370 or e-mail us on info@litetax.co.uk.


Are we leaving the EU?

Are we leaving the EU?

What can your firm do before 29 March 2019?

As the clock continues to tick down to the 29 March 2019, when the UK is scheduled to officially leave the EU at 11pm, there is still much uncertainty around what Brexit will mean for UK business.

What is certain is that it will bring change for businesses of every size and sector, but planning for it seems almost impossible.

For businesses that buy and sell to the EU it is important to have contingency plans in place which are flexible enough to cope with a variety of outcomes.

Preparing for the worst will give your business the best chance of moving through the transition regardless of the outcome of negotiations.

The Government has previously said it is unlikely that no deal will be reached over the UK’s future relationship with the EU, and with the stakes high for both sides it is in everyone’s interests that some form of agreement is reached soon.

Almost half (43%) of the UK’s exports are to the EU and generate £235 billion in export revenue. With the EU being the UK’s largest trading partner, it paints a clear picture that the EU will continue to play a key role for UK businesses in the future.

The British Chambers of Commerce (BCC) believes that all firms, not just those directly and immediately affected, should be undertaking a Brexit ‘health check’ along with a broader review of existing business plans.

A recent BCC survey suggests that a significant number of businesses are either watching and waiting or taking no action at all to prepare for a no-deal Brexit.

Despite the uncertainty ahead, and the short timeframe, there are still a number of steps that businesses of all sizes can take to ensure they are as ready as they can be.

Though the volume of guidance issued by the Government and various business bodies seems daunting, time invested now in thinking through the changes that Brexit could bring to your business could really pay dividends in the future.

Much will depend on the type of business and industry involved, with some industries facing very complex issues. But for all businesses there are some common areas which can be addressed.

Changing trade rules

If the UK should leave the EU without a deal, the two-year transition period will be lost and the expectation is that trade will immediately revert to World Trade Organisation (WTO) rules.

Currently, goods moving between the EU and UK do not need to be checked at borders and have no tariffs imposed. Under WTO rules goods would be subject to customs checks and tariffs, increasing costs for businesses and leading to slower processing times on the borders.

The additional red tape is expected to cost UK firms up to £27bn although the actual impact of these tariffs will vary between industries, with British farmers expected to be the worst hit with charges estimated to be as high as up to 40%.

The Government has said these custom checks would be relaxed for businesses importing goods to UK in the event of a no-deal, but this does not guarantee the same for those exporting to the EU.

The new guidance from HMRC claims importers will file a simplified online form up to two hours before a lorry is due to cross the English Channel by ferry, or one hour if arriving by Eurostar.

Importers will have to update the online entry within 24 hours to notify HMRC of the goods’ arrival, with the duty payable up to a month later.

You can help mitigate the impact this could cause by reviewing your current pricing structure and ensuring your operations are as cost effective as possible to help your business absorb at least some of the potential increased costs. We can help you with this process.

Manage your supply chain

The short-term impact of a no-deal Brexit is likely to be chaotic, but planning for logistical difficulties ahead of time will help your business to be as prepared as possible.

With longer delays at borders predicted and reduced capacity through UK ports, businesses which rely on EU imports – particularly those that operate on a just-in-time stock system – will need to plan ahead to minimise the disruption to their supply chain.

Sourcing an alternative supplier within the UK could help eliminate this issue, but this may not be an option for your business.

Instead you might need to look at alternative planning arrangements which might include building up stock lines that you know will be in demand and are imported from the EU.

Three in five UK businesses with suppliers in the EU are already reporting that currency fluctuations have increased their costs.

Protecting against currency volatility will help safeguard your business against the impact of Brexit.

Sourcing within the UK will help protect your profitability as payments and invoices would be paid in one currency, reducing the risk of uncertainty.

If sourcing within the UK is not an option, strengthening your relationships with existing suppliers could help you negotiate better trading terms in the future.

Paying your suppliers in their local currency could also reduce the uncertainty around currency volatility, while forward exchange contracts allow you to lock in favourable exchange rates for a future date.

We can help you develop a currency strategy to help you plan international payments in advance, and budget accordingly.

Although the EU will remain an important trading partner for the UK, taking some time to focus on your marketing strategy both in your home market and in markets outside the EU could help boost sales and reduce the impact of any potential short-term effect a no-deal Brexit could have on sales.

The UK is home to the third largest e-commerce market in the world and online giants, such as Amazon and Alibaba, are an easy way to reach new international customers.

The Office for National Statistics published its annual report into e-commerce and ICT use among UK firms just before Christmas 2018.

It revealed that in 2017 a startling 54% of businesses in the UK had no website, and even among those with 10 or more employees the number remained as high as 18%.

Getting online is something any business could and should immediately take advantage of.

There is also a growing appetite for ‘Brand Britain’ in markets such as China, US, Australia and Canada, which means there is a great deal of opportunity for UK businesses to trade on their ‘Britishness’ overseas for those that can develop a marketing strategy to take advantage of this.

Whatever the final outcome will be on whether a deal can be reached prior to the UK’s withdrawal from the EU, be reassured that you do not have to navigate Brexit alone.

Contact us for business support and advice.