Taxes I need to pay

PAYE & NIC

A company has to pay PAYE & NIC on a monthly or quarterly bases. This amount needs to be with the HMRC no later then the 22nd of each month. Using a clever system, we automate this to make sure you get paid on time and do not get fined for late payments. This also makes sure you do not get a nasty surprise in April/May when we will help file your company's P35.

VAT

Any company with a turnover of over £73,000 has to register for VAT, you can however register voluntarily if you are below £73,000. The VAT is added on top of your daily rate i.e. £1,000 x 20% is £200 VAT. We would then add the £200 on top the amount invoice to your agency or client. The VAT is then paid across to the HMRC every 3 months, after deducting any VAT the company has paid out.

For example if we received £1000 in VAT from the agency and could reclaim £200 from item we purchased, then we would have to pay the difference to the HMRC.

VAT on Sales £1000
VAT on purchases £200
VAT paid to HMRC £800

You may choose to apply for the flat rate scheme. Depending on the industry and the type of work you are engaged in will therefore depend on percentage you get to keep. You are allowed to keep the difference between the amount you have collected and the amount you are paying out:

Net Sales 25,000.00
   
VAT Rate 20.00%
Flat Rate 15.00%
   
VAT Collected from agency 5,000.00
VAT to Pay 4,500.00
   
   
Amount to Keep 500.00

Corporation Tax

The company has to pay tax on it profit at the end of the year. The tax is due 9 months after the company's year end. For example the company starts trading 1/1/xxx1 and the year finishes 31/12/xxx1. The tax is due to be paid at 30/9/xxx2. At the moment the rate starts 20% of all company profits, if considered to be a small company

Turnover 100,000  
Costs   ( 20,000)
Profit 80,000  
Corporation tax @20 %   (16,000)
Shareholder fund 80,000  

Personal tax

As a director of a limited company you will need to complete a Self Assessment tax return. On that return you will place the income you have taken out of the company through PAYE.

This is also where you would list any dividend you received from the company.

Dividend income in relation to the basic rate or higher rate tax bands Tax rate applied after deduction of Personal Allowance and any Blind Person's Allowance
Dividend income at or below the £35,000 basic rate tax limit 10%
Dividend income at or below the £150,000 higher rate tax limit 32.5%
Dividend income above the higher rate tax limit 42.5%

If the dividend is not taken out of the business then no additional dividend tax will be due.

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