What Tax Issues Do I Need To Consider After My Company Formation?

From Wisteria Formations

There are many tax issues that you need to consider when you have formed a limited company. Some of the main ones are explained here, with the emphasis on those you will need to consider shortly after your formation.

Introduction

After your formation you may need to register for VAT. This can be on a compulsory or voluntary basis. The current compulsory threshold can be obtained from the HMRC website.

VAT

Once you are registered for VAT, there are a number of requirements you will need to fulfil and you may need to take advice on this from a professional.

If you are not reaching the compulsory level, there are reasons why you may want to register voluntarily. These include:

• To show that you are compliant with tax authorities for ‘image’ reasons.

• To portray that you are a larger entity than you actually are.• If all of your customers are VAT registered, meaning that you

will be able to reclaim the VAT suffered on your inputs, but the overall cost for the customers won’t change.

If you have employees or are paying the wages of directors, you may need to operate a payroll system. If so, you will also need to register for Pay As You Earn (PAYE). This is compulsory when you have an employee earning:

Payroll

• More than £95 a week.• More than £412 a month.(for 2009/2010)

It is common for most new companies to register shortly after incorporation so that they are immediately in a position to make payments to staff or directors when the time comes.

A limited company is a separate legal entity from its owners and therefore is liable to tax independently, called corporation tax.

Corporation Tax

The company will need to produce and submit a Corporation Tax Return and computations annually and send them to HM Revenue and Customs.

This is due twelve months after the chargeable period ends and the payment for the corporation tax is due nine months after the chargeable period ends.

An individual who is a Director of a UK company is required to complete an annual self assessment tax return, including directors who are not UK residents.

Directors – Self Assessment

The tax year runs from 6th April to the following 5th April, with the submission date for paper forms being 31st October and the deadline for electronic tax returns being 31st January.

If you work in the building trade or employ or engage contractors, you may need to register for the construction industry scheme (CIS). The CIS scheme regulates the tax issues for the building trade and you will be required to meet obligations in relation to deducting tax at source.

Construction – Construction Industry Scheme

In such cases, you may wish to seek advice from a professional.

Where can I go for more information?

To set up a UK limited company, use Wisteria Formations online company formation service:

www.wisteriaformations.co.uk

For help and advice in relation to UK taxation matters, contact Wisteria Chartered Accountants:

Web: www.wisteria.co.uk Tel: 020 8952 0140