How Business Account Tax Works in the UK

 

Whether you're managing corporation tax or filing a self-assessment, staying on top of your tax obligations is essential to keeping your business running smoothly. Mistakes can be expensive—and that’s why you need to understand what taxes apply to your business, and when they’re due.

 

This guide breaks down the main types of business tax in the UK and explains how your structure affects what you need to pay. Plus, we’ll show how small business accountants in London can help you stay compliant and avoid costly mistakes.

 

What taxes might your business need to pay?

 

The taxes your business owes depend on a few key factors:

 

·         How your business is set up

·         How you pay yourself (drawings, salary, dividends)

·         The amount of profit your business makes

 

You may not have to pay every type of business tax, but which ones may apply can help you plan better and run your business more efficiently.

 

Here are the main taxes small businesses in the UK should be aware of:

·         Income tax

·         Corporation tax

·         Capital gains tax

·         National Insurance

·         Dividend tax

·         Business rates

·         VAT

 

How the business structure affects tax

 

Your tax responsibilities will vary depending on how your business is structured and whether you employ others. All businesses are taxed on profits, but how those taxes are calculated and paid depends on whether you operate as a sole trader or a limited company. If you’re just starting out, our small business accountants in London can help you pick the right structure that complies with HMRC requirements.

 

Sole traders

 

As a sole trader, you own the business yourself, without any partners or directors, though you can still hire employees. You take on full responsibility and make all the decisions for any business debts, including taxes.

 

You’ll pay income tax on your profits once they exceed the personal allowance. In addition, you’ll need to pay National Insurance contributions. And you must register for VAT if your turnover exceeds £85,000 in a 12-month period.

 

Limited companies

 

A limited company is recognised as a legally separate entity from the owners. It must be registered with Companies House to receive a company registration number.

 

If you run a limited company, you must pay corporation tax on profits. You’ll also need to register for VAT if your taxable turnover goes above £85,000 and you provide goods or services subject to VAT.

 

Let’s take the guesswork out of business taxes.

 

Hiring small business accountants in London is the best way to efficiently handle your business taxes. They can help you make the most of available deductions and stay on top of all your obligations.

 

If you're looking to reduce your tax bill and run your business more efficiently, give us a call at 0208 914 8887. At Allenby Accountants, we offer a free, no-obligation consultation to demonstrate how our services can support your operations.