If you are a limited company owner, you have a number of monthly, quarterly and yearly tax and accounting deadlines to keep on top of. Read this guide to make sure you don’t end up on the wrong side of HMRC.
VAT Returns [Quarterly]
If you are trading via a limited company, and expect your business turnover to reach £85,000 or more each year, you must register for VAT. Even if you don’t reach this ceiling, it may be prudent to do so anyway (ask your accountant which scheme is most suitable to your needs).
You must submit a VAT return each quarter, and pay any outstanding VAT you have collected by the end of the month following your VAT quarter. You are allowed an extra week to pay if you use direct debit.
From April 2019, all VAT records must be stored electronically thanks to Making Tax Digital, and your returns must be submitted online.
National Insurance and PAYE [Usually Quarterly]
Unlike dividends, which are taxed via the Self Assessment process (see below), your salary is subject to income tax and National Insurance Contributions (NICs). Your company payroll will typically be set up by your accountant – and salaries paid monthly. Each time the payroll is processed, details of each transaction are submitted to HMRC automatically via RTI.
If your annual salary is higher than the prevailing NIC primary threshold (the point at which NICs become payable), then your company must pay Employers’ NICs, and also Employees’ NICs are paid on behalf of each worker receiving a salary. Your company may be eligible to receive the Employment Allowance which will write off any Employers’ NICs paid out.
Likewise, if your salary is higher than the prevailing personal allowance (£12,570 in 2022-23), your salary will be paid following any deductions for personal income tax.
Income Tax and NICs are paid by companies on behalf of their employees on a monthly basis unless the amounts are low – as they will be in the case of most contractors. If the amounts are under £1,500 per month, you can pay quarterly.
Most contractor companies pay quarterly, by the 19th of the month following the end of the tax quarter in question, or the 22nd if you pay your liabilities electronically.
Annual Accounts [Yearly]
Each year, all limited companies must prepare company accounts to provide to their members and shareholders. A copy must also be lodged with Companies House.
Normally the deadline for submission of these statutory accounts is 9 months from your accounting reference date (ARD). The ARD is typically the end of the anniversary of the month when you formed your company, but your accountant can change this date if necessary.
Typically a company’s Annual Accounts contain a Profit & Loss Account, Balance Sheet and a Directors’ Report, together with any relevant notes, and signature(s). Not all companies need to submit all of these documents, however; small companies and ‘micro-entities’ (such as most contractors companies) are only required to send abbreviated accounts – containing the balance sheet – to Companies House, and the company’s members.
For obvious reason, accountants prepare the accounts for the vast majority of contractor companies. As a client, you will need to read through and check the draft accounts before they are submitted.
Corporation Tax Return (CT600) [Yearly]
The CT600 form is used by accountants to detail the Corporation Tax owed by a limited company for a given tax year. Unless you’re an accounting contractor, this is one task best left to a professional accountancy firm!
Your Corporation Tax liabilities must be paid within 9 months of your company’s year-end. Strangely, the Corporation Tax Return itself doesn’t have to be submitted to HMRC until one year after your year-end.
During the tax year, your company may provide you with services which you benefit from personally. These are known as ‘benefits in kind’ – such as a company car. At the end of the tax year, your accountant will prepare a P11D (which is submitted by the company – as the employer), and employees are liable to pay tax on the value of any personal benefits they have received. Personal tax liabilities are collected via the company payroll (by changing an employee’s PAYE tax code), or via self-assessment. The employer also has to pay Employers’ NICs on the value of any benefits provided to employees during the tax year.
The filing deadlines for P11D forms is 6th July each year.
Confirmation Statements [At least Yearly]
The Statement replaced the old Annual Return Form – and provides Companies House with information about every UK limited company – such as personnel, its registered office address, share capital, etc. Unlike the Annual Return, changes can be reported at any time – and once you have paid the single £13 annual fee, you can update the Statement as often as you need to… as long as no more than 12 months elapse between updates.
You must also provide information about any people with significant control – such as any person who owns 25% of a company’s shares, or more. Find out more here.
Personal Self-Assessment (SATR) [Yearly]
If you’re a limited company director, or if you earned untaxed income in the previous tax year, you must complete a Self Assessment Tax Return.
For most contractors, this is the process by which you pay income tax on any dividends you have received, as well as any other forms of income. The deadline to complete a SATR is January 31st in the year following the tax year in question. This is also the date by which any tax liabilities have to be paid to HMRC.
In addition, you may have to pay Payments on Account (POA) – which are equivalent to your current tax bill, but for one year in advance – half payable by 31st January, the other by 31st July.