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Here you’ll find practical insights, expert advice, and up-to-date guidance across all areas of accountancy and tax. Whether you’re looking to streamline bookkeeping, understand VAT requirements, manage payroll more efficiently, or plan ahead for tax season, our resources are designed to help you save time.
How do I pay my tax bill?
If you need to pay a Self Assessment tax bill, the first step is to make sure your tax return is completed and submitted. For online returns, the deadline is 31 January after the end of the tax year. If you’re filing on paper, the deadline is 31 October. The UK tax year runs from 6 April to 5 April, so your return covers income for that period.
Once your tax return is processed, HMRC will confirm how much you owe. You can pay your bill in several ways, including online banking, debit or credit card, direct debit, Bacs transfer, or even at your bank. It’s a good idea to make the payment a few days before the deadline to allow for processing time.
If you have a limited company, you’ll also need to pay Corporation Tax, which is the tax on your company’s profits. This is due nine months and one day after your company’s accounting period ends. For example, if your year-end is 31 March, the Corporation Tax payment deadline will be 1 January the following year.
What are payments on account?
Payments on account are advance payments towards your next year’s Self Assessment tax bill. HMRC uses your current year’s bill as an estimate for the following year. They usually apply if your tax bill is more than £1,000 and less than 80% of your tax was already collected through PAYE.
There are two payments on account each year: the first on 31 January, and the second on 31 July. Each payment is normally half of your last tax bill. When you submit your next return, HMRC will adjust the amount — if you’ve overpaid, you’ll get a refund; if you’ve underpaid, you’ll have to pay the difference.
If you expect to earn less in the following year, you can ask HMRC to reduce your payments on account. However, if you reduce them too much and end up owing more, HMRC may charge interest on the shortfall.
When should I become a Limited Company?
Becoming a limited company can be a good choice if your profits are around £30,000 or more, as it can sometimes be more tax‑efficient than operating as a sole trader. It also provides ‘limited liability’, meaning your personal finances are separate from the business, so your personal assets are protected if the company gets into debt.
However, running a limited company involves more responsibilities and paperwork. You’ll need to file annual accounts, submit a company tax return, and follow specific rules set by Companies House and HMRC.
It’s worth speaking to an accountant to compare the tax savings with the extra costs and admin before making the switch.
What extra paperwork comes with a Limited Company?
Limited companies must file statutory annual accounts with Companies House, which show the company’s financial position at the end of each year. You’ll also need to submit a Company Tax Return to HMRC, which calculates the Corporation Tax owed.
In addition to these, you must pay Corporation Tax within nine months and one day of your accounting period end, and file a confirmation statement every year to update Companies House with your company details.
You also need to keep thorough financial records of all income, expenses, and assets. These records must be accurate and up-to-date in case HMRC or Companies House request them.
Should I pay myself via salary or dividends?
Directors often pay themselves a combination of a small salary and dividends. A salary ensures you use your personal tax allowance and qualify for State Pension contributions. Dividends, which come from the company’s profits after Corporation Tax, are taxed at lower rates than salaries and don’t incur National Insurance contributions.
However, dividends can only be paid if the company has enough retained profits. It’s important to plan your mix of salary and dividends carefully to remain tax-efficient and compliant with the law.
For example, many small company directors take a salary just above the National Insurance threshold and the rest as dividends to minimise overall tax.
What is the rate of Corporation Tax?
Corporation Tax is the tax that limited companies pay on their profits. For the 2023–24 tax year, if your profits are £50,000 or less, the rate is 19%. If your profits are over £250,000, the rate is 25%.
If your profits fall between these two amounts, you may qualify for something called Marginal Relief, which gradually increases the rate from 19% up to 25%, so you don’t jump straight from one rate to the other.
When should I register for VAT?
You must register for VAT if your business turnover exceeds £90,000 in a rolling 12‑month period. This means you look at your income over the last 12 months, not just the calendar year, to see if you’ve crossed the threshold.
You can also choose to register voluntarily if your turnover is below this level. Voluntary registration can be useful if you work mainly with VAT‑registered businesses, as you can reclaim the VAT you pay on purchases.
Once registered, you’ll need to charge VAT on your sales and submit VAT returns, usually every three months.
What expenses can I claim?
You can claim expenses that are ‘wholly and exclusively’ for your business. This means the expense must be directly related to running your business. Examples include salaries, rent, utilities, travel for work, office supplies, advertising, and professional fees.
Personal expenses, even if partly used for business, are not claimable unless you can clearly split the business element — such as phone bills where only business calls are counted. Dividends cannot be claimed as expenses.
What are my HMRC responsibilities as a director?
As a director, you’re legally responsible for making sure your company meets its tax and reporting obligations. This includes registering for Corporation Tax within three months of starting to trade, filing annual accounts with Companies House, and paying Corporation Tax on time.
You must also file a Self Assessment tax return to declare your personal income from the company, such as salary and dividends. If your company pays staff, you need to run payroll under PAYE and report this to HMRC every time you pay them.
What is IR35 / intermediary legislation?
IR35 is designed to stop people avoiding tax by working through a limited company when they’re essentially an employee in all but name. If you’re ‘inside IR35’, you’ll pay tax and National Insurance in the same way as an employee, which can increase your tax bill.
In the private sector, medium and large businesses are responsible for deciding if IR35 applies to your contract. If you work with a small business or certain public sector bodies, you may need to decide your own status.
Do I need to file a tax return if I’m self-employed?
Yes, you must file a Self Assessment tax return if you earn more than £1,000 in self-employed income in a tax year. This applies even if you have another job and pay tax through PAYE.
Filing a return allows HMRC to calculate the tax you owe based on your self-employed profits.
What records must I keep for my business?
You need to keep detailed records of your income, expenses, invoices, receipts, and bank statements. If you’re VAT‑registered, you must also keep VAT records.
These records must be kept for at least six years. Good record keeping makes filing your tax return easier and provides proof if HMRC asks about your figures.
Can I claim home office expenses?
If you work from home, you can claim some of your household running costs. These can include heating, electricity, internet, and a portion of your rent or mortgage interest.
HMRC allows a flat‑rate method based on the number of hours you work from home each month, or you can work out the exact percentage of your bills that relate to business use.
When are the main tax deadlines?
The main Self Assessment deadline is 31 January for filing your return and paying any tax owed. If you make payments on account, the second instalment is due on 31 July.
Corporation Tax is due nine months and one day after your company year‑end. VAT returns are usually due every three months, and payroll reporting is typically monthly.
What’s the difference between a sole trader and a limited company?
A sole trader is the simplest business structure. You run the business as an individual, keep all profits after tax, but are personally liable for any debts.
A limited company is a separate legal entity. Your personal assets are generally protected, but you’ll have more reporting and compliance requirements.
How can I take money out of my limited company?
You can take money from your company in three main ways: as a salary through PAYE, as dividends from profits, or as a director’s loan. Each option has different tax rules.
Many directors use a mix of salary and dividends for tax efficiency. A director’s loan can be useful for short‑term withdrawals but must be repaid within set deadlines.
What is a UTR number and how do I get one?
A UTR, or Unique Taxpayer Reference, is a 10‑digit number given to you by HMRC when you register for Self Assessment or set up a limited company. It’s used to identify you for tax purposes.
You’ll need it whenever you file a tax return or contact HMRC about your account.
What is Making Tax Digital (MTD)?
Making Tax Digital is a government plan to modernise the tax system by requiring businesses to keep digital records and submit tax returns using approved software.
It’s already mandatory for most VAT‑registered businesses. From April 2026, some sole traders and landlords will also have to follow MTD rules.
Do I need to register for PAYE?
If you employ staff or pay yourself as a director above the Lower Earnings Limit, you must register as an employer with HMRC. This means running PAYE to handle Income Tax and National Insurance and reporting payroll every time you pay someone.
What is Deferred Tax?
Understanding Deferred Tax
Deferred tax represents the difference between the tax that appears in the financial statements and the actual tax payable to HMRC. It arises because accounting rules and tax rules often recognise income and expenses at different times.
What is Deferred Tax?
Deferred tax occurs when there are timing differences between when income or expenses are recognised in the accounts and when they are recognised for tax purposes.
There are two main types of deferred tax:
Deferred Tax Liability – when more tax will be paid in the future. For example, claiming accelerated capital allowances now but recognising depreciation more slowly in the accounts.
Deferred Tax Asset – when less tax will be paid in the future. For example, carrying forward tax losses or recognising expenses earlier in the accounts than for tax.
Example:
Item | Accounting | Tax | Difference | Deferred Tax Impact |
Depreciation on equipment | £2,000 | £4,000 (capital allowance) | £2,000 | Liability (£500 at 25%) |
Tax losses carried forward | N/A | (£5,000) | (£5,000) | Asset (£1,250 at 25%) |
Why It Matters
- Shows the full tax impact for the year, not just what’s payable now.
- Gives a more accurate picture of the company’s profitability.
- Helps with forecasting and understanding future tax obligations.
- Required under accounting standards such as FRS 102 and IFRS.
In short, deferred tax represents a future tax effect of timing differences between accounting and taxable profits. It helps present a true and fair view of a company’s financial position.
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