Tax and company returns
Setting up a limited company brings many responsibilities and paperwork. Here's a guide to the resources that can help you account for your company's business, correctly and legally. Your responsibilities include filling in annual or quarterly returns and submitting accounts to HM Revenue and Customs (HMRC) and Companies House. There are penalties for late submission of returns.
Corporation tax
Corporation tax is income tax for companies. If you set up as a private limited company, you pay corporation tax on your profits. Every year you need to fill in corporation tax return (form CT600) and send it to HMRC with a set of accounts.
- Find out more about corporation tax, and how to calculate your rate. Corporation Tax
- Or see Business Link's Corporation tax: the basics.
Companies House
As a private limited company you must complete an annual return form and supply a signed set of accounts to Companies House every year. Companies House have a step-by-step guide to registration, which you can do online. There is also a telephone helpline 0870 33 33 636.
- Companies House: registration guide
- Business Link offers guidance in File accounts at Companies House.
VAT
Value added tax (VAT) is paid on most business transactions involving the transfer of goods or services (called taxable supplies). VAT registration is compulsory if the total value of these supplies (taxable turnover) reaches a threshold (it was £61,000 in March 2007). If your turnover is not this high but you regularly buy supplies with a high VAT element you can register to claim back the VAT.
If you register for VAT you will have to:
- add the percentage to your invoices (which should clearly show your VAT registration number) on your sales
- keep records of everything you charge your clients
- keep records of everything charged by your suppliers
- make a regular return to HMRC, usually quarterly, which shows how much you owe (or are owed).
Business Link has an interactive tool to help you Identify which VAT scheme your business is eligible to use.
HMRC's VAT: A beginner's guide for business answers questions you might have about setting up VAT.
For information about PAYE and National Insurance, see Paying your employees.
If you want an accountant to help you set up and prepare your tax returns and accounts, see Help with managing your accounts.
