Important tax dates for small businesses to remember
As a self-employed professional who owns a small business, one thing that you need to prioritise is your Self Assessment tax return, which is due by 31 January each year.
It is important to be aware that there is an automatic penalty of £100 if you are late filing your tax return. The tax year runs from 6 April in the current year to 5 April the following year.
Self Assessment tax returns
You must send a tax return if you are:
- self-employed as a ‘sole trader’ and earned more than £1,000 before deducting anything for which you can claim tax relief.
- a partner in a business partnership.
HMRC Tax Return Deadlines
HMRC must receive your tax return and any money you owe by the deadline stated.
The table below shows the deadlines for the 2021/2022 tax year.
Self Assessment Deadlines
Register for Self Assessment if you are self-employed or a sole trader (https://www.gov.uk/register-for-self-assessment/self-employed), not self-employed (https://www.gov.uk/register-for-self- assessment/not-self-employed), or registering a partner or partnership (https://www.gov.uk/register-for-self-assessment/partner-or-partnership)
5 October 2022
Paper tax returns (https://www.gov.uk/self-assessment-forms-and-helpsheets)
31 October 2022
Online tax returns (https://www.gov.uk/log-in-file-self-assessment-tax-return)
31 January 2023
Pay the tax you owe (https://www.gov.uk/pay-self-assessment-tax-bill)
31 January 2023
What are the penalties for late tax returns?
If you miss the self-assessment submission deadline you will receive a penalty of £100 if your tax return is up to 3 months late.
You will have to pay more if your submission is later than 3 months or if you pay your tax bill late and you will also be charged interest on late payments.
You can discover how much your penalty could be if you are late on the gov.uk website at www.gov.uk/estimate-self-assessment-penalties
If you have a reasonable explanation for late filing, you can appeal against a penalty. Visit http://www.gov.uk/tax-appeals/reasonable-excuses for the acceptable list.
How are Limited company owners affected?
Professionals who are starting out in their freelance career are commonly advised to set up as a Limited company by their accountant or business adviser. This is due to the perception that you are protected by the limited liabilities of the business.
As a limited company director, you have a legal responsibility to submit various forms and returns to Companies House and to HMRC.
Running a business as a limited company is usually the most tax efficient way and the limited liability means that your personal possessions and your home are unlikely to be at risk if your business fortunes take a down-turn.
However, operating as a limited company means you have the added administration burden that an employee or sole trader does not have.
What you need to file and when, as a Limited company director
As a Limited company director, you are required to keep both HMRC and Companies House informed about your business, including changes to contact details, size, turnover.
There are differences between Companies House and HMRC when it comes to filing information that you should be aware of.
Companies House provides your Limited company with an Accounting Reference Date when the company is first incorporated. This date is the last day of the month or the first anniversary of the company’s incorporation e.g.: Incorporated January 12th 2021 = Accounting Reference Date January 31st 2022.
For your company tax return and the payment of your corporation tax you are assigned an Accounting Period by HMRC. This begins when you start trading and typically ends on your Accounting Reference Date.
Annual Confirmation Statement
The Confirmation Statement is a separate filing requirement which must be submitted at least once each year. More than one Confirmation Statement can be filed each year if circumstances in your Limited company change, such as a change of address or the addition or resignation of a director.
The Confirmation Statement provides information about your company, the directors, and other administration arrangements that you might have in place.
Be aware that it is a criminal offence not to file your Confirmation Statement within 14 days of the end of the review period.
The review period starts on the date of incorporation and ends 12 months later.
Your Form CT600
The CT600 form is filed with HMRC once per year and contains details about your company’s income, minus any business expenses and tax allowances.
The remaining amount is your taxable profit, which will be used to calculate how much corporation tax your company must pay.
Your Limited company’s first corporation tax payment is due 12 months after your first year-end. Subsequent corporation tax payments are due each year within 12 months of the end of your accounting period.
More about Corporation Tax for Limited companies
If your Limited company made a profit in the accounting period, then you will have to pay corporation tax to HMRC (currently 19% for small companies with profits under £50,000), which must be paid within nine months and one day after the end of the accounting period.
If your company made a loss during the accounting period, or if the company is not trading, then it will pay no corporation tax.
You must keep a full record of your accounts for preparing your annual accounts and any tax records.
Ensuring you claim for all your allowable expenses can help to reduce your corporation tax bill.
National Insurance Contributions (NICs)
You are required to pay a National Insurance contribution if you earn a salary over £9,500 per annum (£792 per month), which is usually paid monthly.
As a Limited company director you can pay yourself a combination of salary and dividends to avoid exceeding the NI threshold, which works fine for many, especially those who are the sole director of the company.
If you pay yourself above the primary threshold of £9,500 per annum, then you will have to pay Employee’s NI.
If you pay yourself (or any employees or other directors) above the secondary threshold, set at £9,100 for the 2022/23 tax year, then your company will have to pay Employer’s NI.
Be aware that if you go down the route of salary plus dividends, the amount of dividends you are paid must also be paid to any other directors in your Limited company.
For further details it is advisable to speak to your accountant.
P60 – By May 31st
Your P60 shows the tax that has been deducted from your salary that you have been paid via your Limited company in the tax year, from April 6th to April 5th the following year.
It is important to keep your P60 safe, as you may need to refer to it at a later date for:
- reclaiming any Income Tax or National Insurance that you might have overpaid. completing your Self Assessment.
- as proof of your income for any applications you need to make for a loan or mortgage.
- an application for tax credits.
As a Limited company owner, you must provide your employees and any other company directors with their P60 by May 31st each year.
P11D – Before July 6th
The P11D is a summary of the ‘benefits in kind’ and expenses (e.g.: company cars or interest-free loans) provided to company directors within a tax year.
You are required to file a P11D with HMRC and keep a copy for your own records even if your Limited company only has one director (you).
If no benefits have been provided you need to file a nil P11D or let HMRC know that a P11D is not needed.
Directors and employees must receive their P11D before July 6th, after the end of the relevant tax year.
PAYE – Monthly
PAYE information is usually submitted monthly.
As a Limited company director, you will probably want to pay yourself a salary via a PAYE scheme as you are still an employee of the company.
Payment on Account – First payment by January 31st – Second payment by July 31st
Payments on account are advance payments to your tax bill, and you must make two payments on account each year unless:
- your last Self Assessment tax bill was less than £1,000
- you have already paid over 80% of the tax you owe.
- each payment is half of your previous year’s tax bill.
If you owe any personal tax you will be required to make payments on account to HMRC each year on the following dates:
- First payment by midnight on January 31st
- Second payment by midnight on July 31st.
Self Assessment – January 31st
As a director of a Limited company, you must submit an annual Self Assessment of your personal income and allowances to HMRC by January 31st each year.
Also known as a personal tax return, the Self Assessment must include details about all your income, dividends paid to you by your Limited company and other income sources such as rental income. Allowances can be claimed for items including personal pension contributions.
Your Self Assessment is due by January 31st every year, but you can file it earlier as soon as you receive your P60.
Year-end Accounts – 9 months after your company’s first year-end, then every 12 months
You must submit a set of accounts to Companies House each year, at the end of your accounting period, which includes your company’s income statement, statement of financial position, and other accounting information.
Details about your company’s finances must be made public in accordance with the Companies Act 2006 and in accordance with accounting standards.
Your first set of accounts are typically due nine months after your first year-end, or within 21 months of its incorporation date. Subsequent year-end Accounts are then due every 12 months.
VAT Return – The end of every quarter
If your Limited company is registered for VAT, you will be required to submit your VAT return every quarter (in some cases annually). The threshold for VAT currently stands at £85,000 turnover per annum.
As a VAT registered company, you must add up all the VAT added to your sales, then deduct any VAT you have paid on business expenses.
The standard rate of VAT is 20%. However, there are flat rate VAT schemes (open to businesses with an expected turnover less than £150,000 within a 12-month period), which are sometimes a better option for freelancers and contractors.
It is advisable to speak to your accountant or business advisor To learn more about which VAT scheme is best for you, as the rates are different depending on your industry sector.
The above list is not exclusive, and at first glance can appear daunting, but as a Limited company owner it is advisable to work with an accountant, who will be able to ensure most of these forms are submitted for you. If you have any questions, you should contact your accountant or business advisor immediately.
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