Death and Taxes
The Two Certainties of Life (And Business).
As Benjamin Franklin famously quipped, “In this world, nothing can be said to be certain, except death and taxes.” If you’re in business, it’s crucial to know which taxes you’ll need to pay.
Our mantra is simple: understand the taxes your business is liable for, and you can plan and budget accordingly. No surprises!
Corporation Tax
Limited Companies are subject to Corporation Tax on their taxable profits.
| Profit Range | Tax Rate (%) |
|---|---|
| Up to £50,000 | 19% (Small Profits Rate) |
| £50,001 to £250,000 | Marginal Relief applies (19% to 25%) |
| Above £250,000 | 25% (Main Rate) |
Note: If your company has associated companies, these thresholds will be reduced.
Income Tax
Sole Traders and Partners pay Income Tax based on their adjusted business profits.
| Region | Tax Band | Rate(%) |
|---|---|---|
| England, Wales, NI | Basic Rate | 20% |
| Higher Rate | 40% | |
| Additional Rate | 45% | |
| Scotland | Starter Rate | 19% |
| Basic Rate | 20% | |
| Intermediate Rate | 21% | |
| Higher Rate | 42% | |
| Top Rate | 48% |
Dividends
Dividends are taxed as income.
| Dividend Band | Tax Rate (%) |
|---|---|
| Up to £500 per year | 0% |
| Above £500 to £12,570 | 0% (if personal allowance not used elsewhere) |
| Basic Rate Band | 8.75% |
| Higher Rate Band | 33.75% |
| Additional Rate Band | 39.35% |
VAT (Value Added Tax)
VAT is added to most goods and services at a rate of 20%. However, some items are zero-rated like books, children’s clothing, and motorcycle helmets. Because nothing says tax exemption like a good book or a safe ride!
If your business turnover exceeds £90,000, you must register for VAT. Turnover under this? You can still register voluntarily – because why not complicate things?
Business Rates
Business Rates are charged on most business premises based on the value of the property. So, if your office has a stunning view, brace yourself for the rates.
Employers’ National Insurance Contributions (NICs)
If you have employees, you must pay Employers’ NICs on their wages and benefits. Smaller firms might claim the Employment Allowance to reduce this burden. Because every little helps!
Capital Gains Tax
Sole Traders, Partners, and Companies may have to pay Capital Gains Tax when selling assets that have appreciated in value.
Asset Types:
- Land and Buildings
- Fixtures and Fittings
- Shares
- Registered Trademarks
- Your Business’s Reputation
Selling a bit of your business? Time to share the love with HMRC.
Summary
Considering taxes is an essential part of any business planning. Being aware and planning accordingly are key to meeting your obligations.
We’re here to help! Get in touch if you have any questions, In the meantime…
Keep Accurate Records: Track all transactions, expenses, and income. File tax returns on time – or face the wrath of the HMRC!
Plan Ahead: Budget for your tax payments to avoid nasty surprises. Set aside money and stay ahead.
Seek Professional Advice: Tax laws are as tangled as a bowl of spaghetti. Professional advice can help you navigate and even find some tasty tax reliefs.
Take Advantage of Tax Reliefs: Check if your business qualifies for small business rates relief, capital allowances, and other goodies.
Consider Your Business Structure: Whether a limited company or a sole trader/partnership structure is best depends on your specific situation. Choose wisely!
How We Work
Working with us couldn’t be easier and we make switching simple…
Step 1.
Book A FREE Consultation
Contact us to book your FREE initial consultation. We’ll work around times that best suit you.
Step 2.
Initial Discussion
We take the time to get to know you and your business, your challenges and expected outcome.
Step 3.
Recommend Options
We’ll review and present our recommended options in plain english with associated fees.
What’s Included
It’s important you make a good connection with your accountant. Your accountant will become an extension of your business, working with you, for you.
Our initial free consultation allows us to get to know each other and for us to understand your challenges. We’ll also explain how we think we can make a difference. Here’s what you should expect in your initial consultation.
Book a FREE Consultation
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