Following the formation of your new UK company you must register for tax. This includes registering the company for Corporation tax and yourself for self-assessment. Additionally, it may be necessary to register for PAYE and VAT. All tax enrolments can now be completed online via HMRC.
Within 14 days of the company formation HMRC will send a letter to your registered office address. This letter will contain information about the different taxes which need to be registered for and will include your company’s Unique Taxpayer Reference (UTR) number. This number will be needed whenever you file tax returns or contact HMRC about your company’s tax.
Setting up an online account with HMRC
To Set up an online account with HMRC you must create a Government Gateway user ID and password. The following information will need to be provided to register:
- Your company’s UTR number
- Tax Office Number (a 3-digit code located before the UTR number on your HMRC letter)
- Company incorporation date
- Company name and registration number
- Company’s registered office address
- Annual accounts date
- Nature of business activities (SIC code)
- Name and address of each director
Within 7 days of registration you will receive an Activation code by post. This code is only valid for a short time so it is important to activate your online account as soon as possible.
If required it is possible to register for VAT and PAYE whilst registering for Corporation Tax.
Registration for corporation tax must be completed within 3 months from the date your company starts any business activity. This includes but is not limited to:
- buying and selling goods with a view to making a profit
- renting or buying property for business purposes
- providing services
- employing people
Once a company is deemed active for Corporation Tax by the HMRC it is required to submit Company Tax Returns.
Value Added Tax (VAT)
Registration for VAT is required if your company’s VAT-taxable turnover exceeds £85,000 in a 12-month rolling period. VAT-taxable turnover is the total value of everything sold which is not exempt from VAT. The threshold may change if your company buys and sells goods from EU countries.
It is also possible to register for VAT if your company is below this threshold. Voluntary VAT registration can be beneficial for small businesses as VAT paid on goods and services can be reclaimed.
After registering for VAT you should receive a VAT certificate within 30 working days. Following this you must register your online VAT account by registering for VAT Online Services with HMRC.
All VAT paperwork and bills must be completed online. VAT returns are submitted to HMRC every 3 months, even if there is no VAT to pay or claim. The deadline for submitting VAT returns and paying bills is 1 calendar month and 7 days after the 3-month accounting period.
Pay As You Earn Tax (PAYE)
To pay employees’ wages as well as deduct Income Tax and National Insurance from employment, your company must be registered with HMRC as an employer.
The PAYE system is used by HMRC to collect employee Income Tax and National Insurance directly from the employee on payday. PAYE can be operated directly by yourself using specialist software or a payroll provider (usually an accountant) can do so on your behalf.
Registration as an employer is completed via your Government Gateway Account by filling out the requisite forms. Once processed, HMRC will post your employer reference number and tax office reference number to your registered office. You must register as an employer before the first payday.
Paying your PAYE
Each month you must pay HMRC the Income Tax, National Insurance, and any other deductions owed from employment minus reductions on any Employer Payment Summary (EPS) that you submitted to HMRC before the 19th in the current tax month.
An EPS is used to claim refunds and allowances from HMRC and must also be submitted if you do not pay any of your employees on a given month.
The PAYE bill must be paid by the 22nd (19th if by post) of the following tax month if payment is made on a monthly basis. Otherwise the deadline is the 22nd after the end of the quarter.
You must set up an employer’s workplace pension scheme and make contributions to staff over the age of 22 who work in the UK and earn at least £10,000 per year.
3% of each employee’s ‘qualifying earnings’ must be paid into your staff’s pension scheme.
Self assessment is the system by which HMRC collects personal tax on dividends and other sources of income not taxed via PAYE.
Registration is completed by filling out a simple form online with HMRC. Once registered it is your responsibility to complete your own tax returns each year. HMRC will send a letter to remind you to prepare a Self Assessment Tax return.
Within a few days of registration you should receive a personal UTR number which will be used to create a new online account allowing you to sign-up for the Self Assessment service.
The deadline for Self Assessment for 20/21 tax year is 5th October 2021. Other deadlines differ depending on the method of return:
- Paper – must be filed by midnight on 31st October after the end of the tax year
- Online – must be filed by midnight on 31st January the following year
The final payment of Income Tax, Dividend Tax, and NI (class 2 and class 4) for the 20/21tax year must be paid by midnight on 31st January 2022.