4th July 2024
In this second instalment of our frequently asked questions series, we’ll delve into the various types of taxes UK businesses face. Gain a clear understanding of taxes to ensure compliance and optimize your business’s tax strategy.
For Employees: Most people pay income tax through their jobs, as reflected on their payslips. You may know this as PAYE which stands for Pay As You Earn.
For Business Owners: As a business owner, you’ll still pay income tax, but the process differs from that of an employee.
Sole Traders and Partners: They pay income tax based on their profits or share of profits during the tax year (ending on 5th April). The tax is due before 31st January. If the tax owed exceeds £1,000, HMRC requires 50% in advance for the next tax year (payable by 31st January), with the remaining 50% due by 31st July.
Company Directors: As well as paying income tax on salaries, they also pay income tax on dividends received from the company. Directors’ dividends are subject to lower rates of dividend tax based on their Income Tax bands. No National Insurance is payable on dividend income.
National Insurance contributions apply to both employees and the self-employed. These contributions determine eligibility for state benefits and pensions. Various types and rates of National Insurance exist, and we would be happy to discuss these in detail with you.
Limited Companies pay corporation tax on their profits:
Corporation tax is due 9 months after the company’s year-end.
For personalized advice, consider reaching out to our experienced team at RDG Accounting. We’re here to help you navigate the tax landscape effectively! Book a meeting with Russell or give him a call.
MEMBERS OF THE ASSOCIATION OF
CHARTERED CERTIFIED ACCOUNTANTS
© 2016 Rdg accounting company no: 06266733. privacy & cookies | disclaimer & terms | Terms & Conditions | COVID-19 | sitemap