Taxes

What taxes will you face when running a Limited Company?

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• Corporation Tax

• VAT

• Employer National Insurance

• Income (Dividend) tax

• Auto Enrolment (Pension tax)

• Entrepreneurs Relief at the end

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Corporation Tax (CT) is a tax on your profits; they are taxed at 19% to 25%; make £100k, and CT will be £19k; CT is paid nine months post your year-end.

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VAT, Value Added VAT is paid on your sales; if you turn over more than £85k, you must register for VAT (you can register to pay this before you reach £90k). VAT can be reclaimed on all your vatable expenses, e.g., a van and office costs. It's usually paid quarterly, so let us help you ensure it's correct and you have saved for the bill.

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Employer National Insurance (ER NI) is payable on what you pay your staff; ER NI is payable at 13.8%, so when you recruit, please bear in mind this hidden tax.

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Income (Dividend) tax is paid when you tax money out of business in the form of Dividends; the first £1,000 is tax-free you pay 8.75% up to £50,000, then 33.75% for Dividends above that.

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Auto Enrolment (Pension tax) staff are automatically enrolled into a pension scheme, and you must contribute to that pension, another stealth tax. Your team pays 5%, and you must contribute 3% of those wages, another hidden employee tax.

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Business Asset Disposal (Entrepreneurs Relief ER) is quite a good tax; at some point, you may wish to sell some/all your business. The gain on this sale can be taxed under ER at 10%. E.g. if you made £500k from selling your business, you would have to pay £50k in tax.

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