Tax Issues for Start-up
For organisations planning to set-up a business in the United Kingdom, the key tax issues might encompass:
- Corporation tax compliance
- Employment taxes
- Value added tax.
Let’s understand each in detail
Tax Issues 1: Corporation tax compliance
Key points to be considered for corporation tax compliance are mentioned below
Who is liable to pay United Kingdom corporation tax?
Registering for corporation tax in the UK
Corporation tax payment dates
Tax Issues 2: Employment Tax
Key points to be considered for employment tax compliance are mentioned below
- Businesses in the United Kingdom must pay its staff at least the National Minimum Wage (£7.83 an hour)
- A Disclosure and Barring Service (DBS) verification will be required if staff will work in a field
Employment taxes, returns and PAYE
Tax Issues 2: Value Added Tax
Key points to be considered for Value Added Tax compliance are mentioned below
Scope of Value Added Tax
- The Value Added Tax registration limit for United Kingdom established organisations is presently £85,000 for a year. An organisation must register for Value Added Tax if its taxable gross revenue is in excess of the VAT registration limit in a 12 month period
- A Nil registration limit is applicable for organisations which are not set-up in the United Kingdom. As a result, such organisations that make a taxable supply in the United Kingdom are needed to register for Value Added Tax, irrespective of the worth of the supply
- An organisation can voluntarily register for VAT if its taxable gross revenue is less than the VAT registration threshold
- European Union VAT has certain rules applicable for business-to-consumer (B2C) purchases of digital services. Providing such services to European Union customers are subject to Value Added Tax in the Member State where the purchaser belongs
VAT payments and returns
- VAT returns are by and large submitted four times a year. VAT return quarters are divided into three cycles i.e. January, April, July and October; February, May, August and November; March, June, September and December
- VAT returns must usually be submitted by the last day of the month subsequent to the end of the return period
- It is not necessary for United Kingdom Value Added Tax registered businesses to submit a twelve-monthly VAT return in addition to their usual periodic (monthly or three-monthly) VAT returns
- HMRC’s Making Tax Digital (MTD) initiative came into effect, for Value Added Tax, on 1 April 2019. Now, businesses with gross revenue in excess of VAT limit will have to maintain their records digitally (as of now this is only applicable for VAT purpose)
Any questions? Schedule a call with one of our experts.
Whether you prefer to meet and speak over the internet, or if you prefer an in person conversation we can help you with your preference.
Stay up-to-date with the latest news affecting small businesses, get business tips and tax saving advice.