A guide to limited company tax responsibilities

A limited company may have different tax responsibilities compared to other business structures (such as sole trader, partnership). Understanding the basics of limited company taxes - what you should pay and when to pay them - is vital for business owners.​

Corporation tax is one of the taxes limited companies should pay. It’s a tax that companies pay on their profits. ​

The corporation tax rate for businesses are set out as below. It’s worth noting that the rate isn’t a fixed number - the rates are different depending on how much profit the company makes.​

The deadline for paying your corporation tax bill is usually 9 months and 1 day after your company’s accounting period. However, there are exemptions for large companies and the date may be slightly different for newly formed companies. ​

The deadline for filing your corporation tax return is 12 months after the end of your company’s accounting period. ​

VAT is another common tax limited companies may pay. It’s a tax added to most of the goods and services sold in the UK. The standard VAT rate is 20%, but there are also reduced rates (5%) and zero rates (0%) for certain goods and services.​

If your business’s annual turnover is over £90,000, you’ll be required to become VAT registered. If your annual turnover is below this threshold, you can still choose to register for VAT. This is called a voluntary VAT registration.​

Once you’re registered for VAT, you’ll also need to:​

The majority of companies need to submit and file VAT returns quarterly. You’ll also need to make the payment within 1 month and 7 days of the end of the accounting period. For example, if your quarter ends on 31st of March, your return and payment are due by 7th of May. Check out our calendar for key tax year dates.​

If you’re interested to know more about VAT, we have a number of blogs for you to read:​

What’s VAT​

How and when to register for VAT​

10 common VAT mistakes small business owners should avoid​

VAT on second hand goods explained​

How do VAT penalties work​

As a business owner, you need to pay NICs to HMRC if you employ staff. As an employer, you’re responsible for 2 types of NICs:​

The NIC rates can change each tax year, so it's important to stay on top of it. You can find the latest rates on the UK government's website (gov.uk). To calculate the NICs you owe, you can use HMRC's online tools or your payroll software.​

The Employment Allowance offers eligible employers an opportunity to reduce their NIC liability. It provides a credit of up to £5,000 per year that can be used to offset the employer's Class 1 NICs. You can read more on employment allowances on our website.​

Generally, you pay your employees' NICs through the PAYE system- you’ll deduct NICs from employee's salary along with income tax, and pay these to HMRC on or before the 22nd of the next month (if you pay monthly). ​

Among the various limited company taxes, corporation tax, VAT, and NICs stand out as three major obligations to HMRC. However, there are other limited company tax returns you may need to file.​

For example, if your company operates in the construction industry, you may be required to register for CIS, deduct tax from payments to subcontractors and report these deductions to HMRC. For directors of limited companies, they also need to file a self-assessment tax return each year.​

Hiring an accountant (e.g. Beany) to handle your limited company's taxes can feel like a weight lifted off your shoulders. Tax laws are a bit of a maze, a good accountant can guide you through the ever-changing tax landscape and make sure you don't miss any deductions or end up with any surprises from HMRC. At Beany, we can handle your limited company taxes -  everything from VAT returns to PAYE, so you can focus on what you do best – running your business. Contact us or register today.​