Company filing obligations

It is important that anyone responsible for the accounts and tax filing regime for private limited companies is aware of their obligations.

After the end of its financial year, a private limited company must prepare full annual accounts and a company tax return. The deadline for filing the first set of accounts with Companies House is 21 months after the date the company was registered with Companies House. Annual accounts must be submitted 9 months after the company’s financial year ends.

There is a fixed date for the payment of Corporation Tax which is 9 months and 1 day after the end of the relevant accounting period. Note that a company is usually required to pay the tax due in advance of the filing deadline for a company tax return.

In most cases a company’s tax return must be submitted within 12 months from the end of their accounting period. Online Corporation Tax filing is compulsory for company tax returns. Company tax returns have to be filed using the iXBRL data standard using either HMRC’s own software or third-party commercial software.

The accounting period for Corporation Tax is normally the same twelve months as the company financial year covered by the annual accounts. Note that there are penalties for late filing with Companies House and HMRC.

Source:Companies House | 07-07-2024


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Claim full expensing or 50% FYA

Full expensing allows for a 100% first-year capital allowance for qualifying plant and machinery assets and came into effect last April. To qualify for full expensing, expenditure must be incurred on the provision of “main rate” plant or machinery.

Full expensing is only available to companies subject to Corporation Tax. 

Plant and machinery that may qualify for full expensing includes (but is not limited to):

  • machines such as computers, printers, lathes and planers;
  • office equipment such as desks and chairs;
  • vehicles such as vans, lorries and tractors (but not cars);
  • warehousing equipment such as forklift trucks, pallet trucks, shelving and stackers;
  • tools such as ladders and drills;
  • construction equipment such as excavators, compactors, and bulldozers; and
  • some fixtures such as kitchen and bathroom fittings and fire alarm systems in non-residential property.

Under full expensing, for every pound a company invests, their taxes are cut by up to 25p. For “special rate” expenditure, which does not qualify for full expensing, a 50% first-year allowance (FYA) can be claimed instead.

Businesses can also continue to use the Annual Investment Allowance (AIA) to claim a 100% tax deduction on qualifying expenditure on plant and machinery of up to £1m per year. This includes unincorporated businesses and most partnerships.

Source:HM Government | 01-07-2024


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Post cessation transactions

Tax relief may be available for post-cessation expenses of a trade. To be an allowable post-cessation expense the trade must have ceased and the expense must have been deductible in calculating the trading profits.

This means that the expense still has to meet the wholly and exclusively test and be revenue, not capital, expenditure. The expenditure can be apportioned if necessary. The way in which post-cessation expenses can be relieved depends on the person incurring the expenditure and the type of expenditure involved.

The following are examples of expenses that would likely be categorised as post-cessation expenses:

  • remedying defective work done, goods supplied, or services rendered while the business was continuing or as damages in respect of such defective work, goods or services whether awarded by a Court or agreed during negotiations on a claim;
  • paying legal or other professional expenses incurred in connection with the costs above;
  • insuring against liabilities arising out of any such claim or against the incurring of such expenses; and
  • collecting, or seeking to collect, debts which were taken into account in computing the profits of the trade before discontinuance.

An expense specifically relating to the cessation itself is not an allowable deduction for tax purposes.

Source:HM Revenue & Customs | 17-06-2024


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

How to claim R&D expenditure credit

In the Autumn Statement last year, it was announced that the existing R&D Expenditure Credit and Small and Medium Enterprise Scheme would be merged from April 2024. The merged scheme R&D expenditure credit (RDEC) and enhanced R&D intensive support (ERIS) became effective for accounting periods beginning on or after 1 April 2024. The expenditure rules for both are the same, but the calculation is different.

The merged RDEC scheme is a taxable expenditure credit and can be claimed by eligible trading companies within the charge to UK Corporation Tax. You can choose to claim under the merged scheme instead even if you are eligible for the ERIS, but you cannot claim under both schemes for the same expenditure.

The calculation and the payment steps of the merged scheme RDEC are broadly the same as the old RDEC scheme, however:

  • a lower rate of notional tax restriction is available to small profit-makers and loss-makers; and
  • a more generous PAYE cap applies.

The merged RDEC scheme is liable to Corporation Tax as it is deemed to be trading income.

The ERIS scheme allows loss-making R&D intensive SMEs to:

  • deduct an extra 86% of their qualifying costs (additional deduction) in calculating their adjusted trading loss, as well as the 100% deduction which already appears in the accounts, to make a total of 186% deduction; and
  • claim a payable tax credit, which is not liable to tax, and which is worth up to 14.5% of the surrendered loss.

The changes in the rules are complex and advice should be sought to ensure that any R&D spend remains qualifying. There have also been significant changes to the restrictions for expenditure on overseas R&D activities which are now generally restricted.

Source:HM Revenue & Customs | 05-05-2024


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Directors who are liable for unpaid tax

HMRC has the power to make directors personally liable for paying the tax debts of companies they have been involved in under certain limited circumstances. This can also apply to certain other individuals associated with a company.

A joint and several liability notice tells the recipient that they are personally responsible, along with the company and anyone else issued with a notice, to pay the penalty amount raised against the company.

There are a number of important conditions that must be met before HMRC can issue a notice. The underlying legislation applies to liabilities relating to any period that ended on or after 22 July 2020. 

Directors could receive a joint and several liability notice in cases of:

  • tax avoidance and tax evasion;
  • repeated insolvency and non-payment cases; and
  • facilitating avoidance or evasion, for example, helping others to avoid or evade paying tax due.
Source:Other | 29-04-2024


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Restarting a dormant or non-trading company

HMRC must be informed when a non-trading or dormant company starts trading and becomes active for Corporation Tax purposes. Companies can use HMRC Online Services to supply the relevant information. 

When a company has previously traded and then stops it would normally be considered as dormant. A company can stay dormant indefinitely, however, there are costs associated with doing this and certain filings must still be made to Companies House. The costs of restarting a dormant company are typically less than starting from scratch again. 

The following steps are required:

  1. Tell HMRC that your business has restarted trading by registering for Corporation Tax again.
  2. Send accounts to Companies House within 9 months of your company’s year end.
  3. Pay any Corporation Tax due within 9 months and 1 day of your company’s year end.
  4. Send a Company Tax Return – including full statutory accounts – to HMRC within 12 months of your company’s year end.

Whilst reporting dates for annual returns and accounts should remain the same. The Corporation Tax accounting period is different and is set by reference to the date when the company restarts business activities.

Source:Companies House | 01-04-2024


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

What is a business repair?

HMRC’s internal manuals provide some useful information on the definition of a business repair. This is important because it is required to identify the asset on which work has been carried out.

This is because:

  • the cost of repairing a worn or dilapidated asset is normally an allowable expense;
  • the cost of replacing the whole or the ‘entirety’ of an asset is not a repair; it is capital expenditure and not an allowable expense.

HMRC’s guidance goes on to explain that what forms the asset or entirety is a question of fact. It is important to ascertain whether the ‘asset’ is in fact a separate asset or is part of a bigger asset.

The basic starting point is to establish the facts about the specific asset you are considering and then to ask the question; does this look like a separate asset? Is it something that stands apart from other assets, is it freestanding or is it something that is removable? This is a question of fact and degree; there are no ‘tests’ that can be applied.

With buildings and structures, the question is whether the item replaced appears to be a free-standing asset. The fact that it is connected to another structure, for example by a flue, does not make it part of that larger asset.

It also needs to be considered whether something has become part of something else. If something is a ‘fixture’ then it has become part of the building and not an entirety in its own right. 

Source:HM Revenue & Customs | 06-11-2023


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Company tax return obligations

After the end of its financial year, a private limited company must prepare full annual accounts and a company tax return. In most cases a company’s tax return must be submitted within 12 months from the end of the accounting period it covers. Online Corporation Tax filing is compulsory for company tax returns. Company tax returns must be submitted using either HMRC’s own software or third-party commercial software approved by HMRC and in the required format.

The accounting period for Corporation Tax is normally the same 12 months as the company financial year covered by the annual accounts. There is a separate fixed date for the payment of Corporation Tax which is 9 months and 1 day after the end of the relevant accounting period. This means that a company is usually required to pay any Corporation Tax due in advance of the filing deadline of a company tax return.

A company has a right to amend its company return within 12 months from the statutory filing date. Examples of when a return may be amended include claims for group relief and elections rebasing for capital gains.

There are penalties for late submission of company tax returns. There is a standard penalty of £100 for a late submission of the return within 3 months of the due date and a £200 penalty if the return is over 3 months late. Companies that submit late returns for 3 or more accounting periods in a row are subject to increased penalties. There are further tax based penalties for companies that do not file a return within 18 months of the end of the relevant accounting period and which have not paid the tax due. These penalties can be either 10% or 20% of the unpaid tax depending on the lateness of the filing.

Company owners with the popular 31 March year end date, will have a Corporation Tax payment date – for the year to 31 March 2023 – that will be due for payment on or before 1 January 2024.

Source:HM Revenue & Customs | 06-11-2023


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Accounting periods for Corporation Tax

Companies often have two different company accounting periods. This is because there are different rules for Companies House filings and for returns sent to HMRC.

The accounting periods can be the same but can also differ and a change may need to be made to ‘sync’ the accounting periods. As a general rule the Companies House rules are more flexible and under certain circumstances it is possible to make a change to the year end. The Companies House accounting period can sometimes run for more or less than 12 months.

A tax accounting period for Corporation Tax purpose cannot be longer than 12 months. This can mean that you will need to file two returns to HMRC to accommodate the maximum 12 month rule.

If your accounts cover less than 12 months, then your accounting period will normally end on the same day and will be shorter than 12 months. This can happen if the company stops trading or shortens its company’s year-end also known as its accounting reference date.

Source:Companies House| 16-10-2023


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

No gain – no loss transfers in groups of companies

There are special rules concerning the transfer of assets in groups of companies. In most cases, this means that where assets are moved around group companies, there are no immediate capital gains consequences. This effectively allows for a tax neutral, no gain – no loss transfer opportunity.

HMRC’s manuals states that:

This is achieved by fixing both the consideration received for the asset by the transferor and the consideration given for the asset by the transferee. The transferor has neither chargeable gain nor allowable loss. The transferee effectively takes over the transferor’s capital gains cost, augmented by indexation allowance as appropriate.

The no gain – no loss rule only applies where a member of a group of companies disposes of an asset to another member of the same group. There is a general requirement that there should be both a disposal by a group company and an acquisition by a group company.

The no gain/no loss rule does not apply where a group company makes a deemed disposal of an asset for consideration received from another group company, if the group company paying the consideration does not itself acquire an asset.

There are also other specific exceptions that must be considered before relying on the use of a no gain – no loss transfer.

Source:HM Revenue & Customs| 18-09-2023


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Utilising Capital Gains Tax losses

Usually, if you sell an asset for less than you paid for it you would make a capital loss. As a general rule, if the asset would have been liable to CGT had a gain taken place, then the loss should be an allowable deduction. 

The exact treatment of losses depends on whether they are:

  • losses of the same year of assessment as the gains;
  • losses of earlier years of assessment;
  • losses of the tax year of death; or
  • particular losses which may, exceptionally, be carried back from a later year of assessment.

These deduction of an allowable loss from chargeable gains does not require a claim and does not extend the time limit for enquiring into the original loss claim. Gains accruing in a tax year may be chargeable to CGT at different rates. Therefore, the tax effect of losses and the annual exempt amount set off against those gains can vary.

In most circumstances, allowable losses and the annual exempt amount can be deducted in the way that is most beneficial to the individual. This will usually be against gains that are charged at the highest rate. A claim for losses does not have to be made straight away and can be made up to 4 years after the end of the tax year that the relevant asset was disposed.

Where there remain unused losses that cannot be set against gains of the same year, these losses are carried forward to be set against future gains. It is only possible to utilise losses brought forward if net gains exceed the annual CGT exempt amount for the year.

Source:HM Revenue & Customs| 18-09-2023


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

file your company accounts early to avoid penalties; london accountant; farringdon accountant

Early company account filing can save you from penalties

Early company accounting filing can save you from penalties

Running a business in the UK entails several responsibilities, and foremost among them is ensuring that your company’s accounts are filed on time. Companies House, the executive agency responsible for company registration, has recently emphasised the importance of this duty and emphasised the fines that result from late filing.

Mandatory Requirement for All

Companies House has made it clear: all limited companies must deliver their annual accounts each year, regardless of whether they actively trade or not. This also encompasses dormant companies. Thus, no company is exempt from this requirement.

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Directorial Responsibilities

As a director, your role is multifaceted. It’s not only about growth and profits, but also about ensuring the company remains compliant with set regulations. This includes keeping all company records updated and ensuring timely submissions.

Credit Scores & Financial Reputation

Late or missing account filings could negatively impact your company’s credit score. This might hinder your access to vital financing options, and potentially deter other businesses from collaborating or transacting with you.

Consequences of Late Filing

Apart from the financial repercussions, there are potential legal consequences to be aware of:

  • Filing late by up to 1 month results in a £150 fine.

  • Delays of more than 1 month but less than 3 months result in a £375 fine.

  • If your accounts are late by more than 3 months but less than 6 months, the penalty stands at £750.

  • Delays of over 6 months see the penalty rise to a hefty £1,500.

Furthermore, in addition to these fines, you risk acquiring a criminal record or facing disqualification.

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About the Author
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Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Carrying company losses back

Corporation Tax relief may be available where your company or organisation makes a trading loss. A qualifying trading loss may be used to claim relief from Corporation Tax by offsetting the loss against profits in previous years.

This could be a useful option for companies that have incurred significant losses. Carrying back a trading loss allows companies to seek relief by carrying them back to an earlier profit-making period resulting in a reclaim of Corporation Tax.

Usually, such a claim could only be made once a Corporation Tax return has been prepared and submitted to HMRC. However, in exceptional cases HMRC will allow claims to be carried back based on anticipated losses before the end of a current accounting period. Companies making a submission to HMRC requesting the early carry back of losses would need to provide HMRC with full evidence to support such claims.

Losses may only be carried back against profits of a preceding accounting period if the company was carrying on the trade (in which the loss was incurred) at some time in that accounting period.

Any claim for trading losses forms part of the Company Tax Return. The trading profit or loss for Corporation Tax purposes is calculated by making the usual tax adjustments to the figure of profit or loss shown in the company’s or organisation’s financial accounts.

If a company ceases to carry on a trade, the preceding period is three years preceding the accounting period in which the loss is incurred. Accounting periods must be taken in order, the most recent first.

Source:HM Revenue & Customs| 31-07-2023


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Corporation Tax Group Payment Arrangements

A Corporation Tax Group Payment Arrangement (GPA) is a special arrangement that allows groups of companies to make joint payments of Corporation Tax. This type of arrangement can reduce the administration and costs associated with making a large number of individual payments. A GPA can also let members of the group mitigate any potential differential interest charge by allowing the group to allocate payments in a way that is most beneficial.

Only certain groups can qualify for GPA and a legal agreement needs to be made. Companies that can enter a GPA are a parent company and its 51% subsidiaries. The 51% subsidiaries of those subsidiaries, and so on, can also be included in the group. This definition is not necessarily the same as other definitions used for groups by HMRC and other government departments and agencies.

A GPA does not alter the fact that each company is liable for its own Corporation Tax, although a GPA also makes the nominated company liable to discharge the Corporation Tax liabilities of all the companies participating in that GPA.

An application for using a GPA should only be made once all the necessary conditions have been or will be met. The application should be sent to HMRC at least one month before the first payment is due for the accounting period to be covered by the GPA. That is 6 months and 13 days after the start of the Corporation Tax accounting period.

Source:HM Revenue & Customs| 31-07-2023


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

hmrc deadlines july and august 2023; london accountant; wimbledon accountant

Key HMRC Deadlines for July and August 2023 You Need to Know

Key HMRC Deadlines for July and August 2023

As we step into July and August 2023, it’s essential to stay updated with the upcoming deadlines from HM Revenue and Customs (HMRC). Here’s a comprehensive guide to help you navigate these crucial dates and ensure that your business remains tax compliant.

1 July 2023 – Corporation Tax
The due date for corporation tax for the fiscal year ending 30 September 2022 is 1st July 2023. This deadline applies to corporations and businesses operating within the UK, and it pertains to the tax owed on all profits from your trading, investments, and chargeable gains. Ensure your business has calculated and prepared to pay its tax liability by this date.

 

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6 July 2023Forms P11D and P11D(b)
By 6th July 2023, businesses should complete and submit the P11D and P11D(b) forms. These forms concern the return of benefits and expenses (P11D) and the return of Class 1A National Insurance Contributions (NICs) (P11D(b)). This obligation primarily concerns employers who have provided certain benefits to their directors or employees.

19 July 2023 – Class 1A NICs
The payment for Class 1A NICs is due by 19 July 2023. However, if you plan to pay electronically, the deadline extends to 22 July 2023. This payment pertains to employers who have provided benefits such as company cars to their employees.

19 July 2023 – PAYE and NIC deductions
PAYE and NIC deductions for the month ending 5 July 2023 must be made by 19 July 2023. If you opt to make your payment electronically, the due date extends to 22 July 2023. This deadline applies to all employers who deduct PAYE and NICs from their employees’ wages.

19 July 2023 – CIS300 monthly return and CIS tax
The deadline for filing the CIS300 monthly return for the month ending 5 July 2023, and payment of the CIS tax deducted for the same period, is 19 July 2023. This applies to contractors operating under the Construction Industry Scheme (CIS).

1 August 2023 – Corporation Tax
For the fiscal year ended 31 October 2022, the due date for corporation tax is 1 August 2023. All corporations and businesses operating within the UK need to ensure they’ve prepared to meet this deadline.

19 August 2023 – PAYE and NIC deductions
For the month ending 5 August 2023, the PAYE and NIC deductions are due by 19 August 2023. Electronic payments can be made until 22 August 2023. All employers deducting PAYE and NICs from their employees’ wages need to take note of this deadline.

19 August 2023 – CIS300 monthly return and CIS tax
The filing deadline for the CIS300 monthly return and payment for the CIS tax deducted for the month ending 5 August 2023 is 19 August 2023. This is crucial for contractors operating under the CIS.

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About the Author
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Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

double tax treaties in the UK: what they are and how to claim after being taxed twice; london accountant; farringdon accountant

Understanding double tax treaties in the UK

Understanding double tax treaties in the UK

Double tax treaties, also known as double taxation agreements, play a vital role in facilitating international trade and investment by preventing double taxation. These agreements are designed to provide relief and clarity to taxpayers operating across borders. In this blog post, we will explore the concept of double tax treaties, examine their impact on taxpayers, and shed light on the countries with which the United Kingdom (UK) has such treaties.

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What are Double Tax Treaties?

Double tax treaties, also known as tax conventions or tax treaties, are agreements established between two or more countries to resolve potential conflicts regarding taxation. These treaties aim to eliminate or reduce instances of double taxation, where the same income is taxed by more than one jurisdiction. By doing so, they help avoid situations where taxpayers could be subjected to excessive tax burdens, fostering a favourable environment for cross-border trade and investments.

Double tax treaties typically address several key aspects, including:

Tax Residency
Determining an individual or entity’s tax residency status is essential to determine which country has the primary right to tax their income.

Income Categories
The treaties define the various types of income, such as dividends, interest, royalties, and capital gains, and allocate taxing rights between the countries involved.

Avoidance of Double Taxation
The agreements specify mechanisms to avoid double taxation, such as granting exemptions, providing tax credits, or applying a reduced tax rate.

Exchange of Information
Double tax treaties often include provisions for the exchange of information between tax authorities to prevent tax evasion and ensure compliance.

 

Which Taxpayers are Affected by double taxation agreements?

Double tax treaties impact different categories of taxpayers engaging in international activities. These include:

Individuals
Individuals who are tax residents of one country but earn income in another are directly affected by double tax treaties. These can include employees working abroad, students receiving scholarships, or retirees receiving pensions from foreign sources.

Businesses
Multinational corporations, small and medium-sized enterprises (SMEs), and sole proprietors engaged in cross-border trade or investment activities are significantly affected. Double tax treaties provide clarity on the taxation of business profits, dividends, interest, and royalties, avoiding potential tax burdens.

Investors
Individuals or entities investing in foreign countries may be subject to various taxes, including capital gains tax. Double tax treaties can help mitigate the impact of such taxes by providing relief or reducing tax rates.

 

Which countries have Double Tax Treaties with the UK?

The UK has an extensive network of double tax treaties with numerous countries worldwide. These treaties aim to promote international trade and investment by facilitating fair and efficient tax treatment. Here are some notable countries with which the UK has double tax treaties:

United States
The UK US double tax treaty helps prevent double taxation on income and capital gains for individuals and businesses operating across these two countries.

Germany
The double tax treaty between the UK and Germany addresses various aspects of taxation, including business profits, dividends, interest, and royalties, benefiting taxpayers from both nations.

France
The double tax treaty between the Uk and France focusses on avoiding double taxation, determining tax residency, and ensuring effective exchange of information, benefiting taxpayers in both countries.

China
The UK and China have a double tax treaty that helps avoid double taxation and provides relief for individuals and businesses earning income in both jurisdictions.

These examples represent only a fraction of the countries with which the UK has double tax treaties. The UK’s extensive network of such agreements enhances certainty, reduces barriers, and encourages cross-border economic activities.

 

How to claim tax relief if you are taxed twice

To claim relief on foreign income and avoid being taxed twice, there are a few important steps to follow. If you haven’t been taxed yet, you should apply for tax relief in the country where your income originates by contacting the foreign tax authority and submitting the necessary form or letter. If you’ve already paid tax on your foreign income, you can claim Foreign Tax Credit Relief when reporting your overseas income in your UK tax return.

The amount of relief you receive depends on the double-taxation agreement between the UK and the country where your income is from. Make sure to consult HM Revenue and Customs (HMRC) or seek professional tax advice if you have any uncertainties or need assistance with double-taxation relief.

You can also read our full post on claiming relief for double taxation.

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About the Author
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Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

london accountant; uk corporation tax changes 2023; limited company tax rate UK

Limited Company Tax Rate UK: 2023 changes explained

The UK government announced in the Spring Budget 2021 that the main limited company tax rate would increase from 19% to 25% from 1 April 2023. This change was originally due to come into effect in April 2022, but was delayed due to the COVID-19 pandemic.

The new corporation tax rate will apply to all companies with profits of £250,000 or more. Companies with profits of less than £50,000 will continue to pay corporation tax at 19%. HMRC has also implemented a system of marginal relief for companies that fall in between these two limits.

 

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How does marginal relief for corporation tax work?

In addition to the increase in the main rate of corporation tax, there will also be a new system of marginal relief for companies with profits between £50,000 and £250,000. Under this system, the amount of corporation tax payable will be reduced by a percentage for every £100 of profits above £50,000. The percentage reduction will be 1% for the first £100,000 of profits, and 0.5% for any profits above £100,000.

Put simply, companies with profits between £50,000 and £250,000 will pay an effective tax rate somewhere between 19% and 25% after marginal relief. The easiest the way to calculate your new tax obligations if your company falls within this bracket is to use HMRC’s marginal relief calculator.

The following table shows the new corporation tax rates and marginal relief percentages:

ProfitsCorporation Tax RateMarginal Relief Percentage
£0 – £50,00019%n/a
£50,000 – £250,00025%1% for the first £100,000 of profits, 0.5% for any profits above £100,000
£250,000 or more25%n/a

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About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Using Companies House WebFiling to simplify your tax returns; london accountant

Using Companies House WebFiling to simplify your tax returns

In today’s fast-paced business environment, efficient and accurate filing processes are essential for every company. Companies House WebFiling provides a convenient and streamlined way to manage your company’s filing requirements online. In this blog post, we will explore the benefits of using Companies House WebFiling and how it can help your accounting firm and clients stay compliant while saving time and resources.


Understanding Companies House WebFiling

Companies House WebFiling is an online platform provided by Companies House, the UK’s official registrar of companies. This platform allows businesses to file various statutory documents electronically, simplifying the entire filing process. With Companies House WebFiling, accountants and businesses can submit documents quickly and securely without the need for manual paperwork or physical visits.

 

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Key Benefits of Companies House WebFiling

  1. Time-saving Convenience
    By using Companies House WebFiling, accounting firms can save valuable time and resources. No longer will your team need to navigate through complex paperwork or make trips to the Companies House office. The platform allows you to file documents anytime, anywhere, making it a convenient solution for busy accounting professionals.

  2. Enhanced Accuracy
    Manual paperwork is prone to human error, leading to potential mistakes and delays in filing. Companies House WebFiling eliminates the risk of errors by providing a digital platform that guides you through the filing process, ensuring all required information is entered correctly. The system also performs validation checks, minimizing the chances of rejection due to missing or incorrect data.

  3. Cost Efficiency
    Traditional filing methods often incur additional costs, such as printing, postage, and travel expenses. By using Companies House WebFiling, your accounting firm can significantly reduce these expenses. The platform’s online submission process eliminates the need for physical copies and mailing, resulting in cost savings for your firm and clients.

  4. Real-time Updates and Notifications
    Companies House WebFiling provides immediate confirmation of document submissions. You can easily track the progress of your filings and receive notifications on the status of your documents. This ensures that you and your clients stay informed throughout the process and can take necessary actions promptly if required.

How to Get Started with Companies House WebFiling

Getting started with Companies House WebFiling is a straightforward process. Follow these steps to make the most of this efficient filing platform:

    1. Register for an Account
      Visit the Companies House website and register for a WebFiling account. Provide the necessary information and wait for your account to be approved. Once approved, you can log in and begin using the platform.

    2. Familiarize Yourself with the Process
      Take some time to explore the platform and familiarize yourself with its features. Companies House provides comprehensive guidance and tutorials to help you navigate through the system and make the most of its capabilities.

    3. Gather the Required Information
      Before filing any documents, ensure you have all the necessary information at hand. Double-check the accuracy of the data to minimize the chances of rejection or delays.

    4. Submit Your Documents
      Using Companies House WebFiling, submit the relevant documents in accordance with the statutory requirements. Follow the platform’s instructions to provide all the requested information accurately.

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Wimbledon Accountant

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About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Comparing company formations in the UK

Comparing company formations in the UK

All legal profit-seeking businesses fall into one of two broad categories: unincorporated and incorporated. The difference is that incorporated forms have what is called a ‘separate legal personality’. The business is considered its own entity under the law.

This means that those in charge of unincorporated businesses bear full responsibility for the company’s debts. The people running incorporated businesses, on the other hand, have what is called ‘limited liability’ – they only stand to lose what they have already invested.

To incorporate or not?

The most important difference between being self-employed and running a limited company is liability and the amount you are taxed. As explained above, self-employed individuals have full responsibility for any losses, while shareholders in a limited company only lose as much as they paid (or promised to pay) for their shares.

Company income is not taxed at the same level as personal income tax paid by employees and people that are self-employed. At under £50,000 annual income, corporate tax is only 1% lower than the standard 20%.

But above £50,270 your personal tax rate jumps to 40%. Even the highest corporate tax rate is only 25%, which means gaining income from a limited company more tax efficient no matter how much you earn.

Company formation agents

Company formation agents are independent, professional firms that specialise in company formation and registration with Companies House.

We at CIGMA Accounting specialise in helping sole traders incorporate their businesses. If you’re looking to take advantage of the lower tax rates for companies, our CIMA-registered accountants would be happy to assist with company formation in London and across the UK.

Contact us here or scroll to the end of this page to get a free quote.

Unincorporated businesses

These businesses are not considered as separate entities from the owners. This means that owners have full responsibility, i.e. ‘liability’, for the company’s debts and legal obligations. Owners are considered self-employed and must submit annual self-assessment tax returns.

Sole Trader

This is the simplest way to set up and run a business. Ownership and control of the business rests solely with a single person. Regulation for the Sole Trader is minimal. There is no requirement to write a formal constitution for the business, and no need to register with the government’s Company House.

Profits are treated as personal income which is subject to income tax as well as national insurance contributions. Being a Sole Trader is risky by nature, as the owner has unlimited personal liability for the business’ debts and contracts.

Of course they also own all of the business’ assets, and can employ staff. It is unlikely that being a Sole Trader is best for any businesses that need more than small amounts of external investment. Being unincorporated puts limits on borrowing money and raising money by selling shares. 

Unincorporated Association

Unincorporated Associations are groups of people that agree, i.e. ‘contract’, to work together for a specific purpose. These businesses usually have a constitution setting out its purpose, rules, and members.

They are usually run by a kind of management committee, all of whom have unlimited liability (unless specifically made immune in the constitution). They are subject to the same restrictions as the Sole Trader.

Partnership

A partnership is a relatively simple way for two or more people to set up a business aimed at making profit. While formal agreement isn’t needed for a partnership to form, it is usual to draw up a legally binding ‘partnership agreement’. This sets out things like the capital put in by each member, and how profits will be shared.

Partners share all the risks and responsibilities of the business. Partners do not need to be individual people, they can also be any ‘legal person’ – such as a company. In these cases, the partners have extra tax and reporting obligations.

Limited Partnership

This is not to be confused with the similarly named, but incorporated, Limited Liability Partnership. These businesses have two kinds of partners: general partners and limited partners.

Limited partners may not be involved in the management of the business and their liability is limited to the amount they have already invested. Unlike other unincorporated businesses, Limited Partnerships must register with Companies House.

Trust

Trusts are essentially legal tools for holding assets with the aim to separate legal ownership from economic interest. A trust holds assets on behold of another person or business, and is run by a small group of trustees.

Trusts usually just manage assets and do not give out profits. They are often used alongside unincorporated associations which can’t own property themselves.

Incorporated businesses

Incorporated forms of business are considered their own legal persons. This gives the owners of the business limited liability for its debts and obligations, but they are subject to stricter regulations.

Limited Company

The Limited Company is the most common kind of legal business, and is subject to corporate tax rather than personal income tax. They must have two constitutional documents:

  • A Memorandum, which records the fact that the founding members wish to form a company together. This cannot be amended.
  • Articles of Association, which sets out legally binding rules regarding decision-making, ownership, and profit sharing.

A Limited Company is owned by members, who have all invested in the business. The company’s finances are separate from the members’ personal finances. There are two ways to determine members: shares and guarantees.

Most companies are Limited by Shares. This means members own one or more shares in the company and are known as shareholders. If the company must be liquidated, the shareholders only stand to lose the amount still unpaid on shares. Shareholders also have voting rights, which may depend on the kind of share they own.

A company can also be Limited by Guarantee. This is where members give a guarantee to pay a set amount if the company fails and goes into liquidation.

The day to day management of a company, performed by a ‘director’ or board of directors, is in principle separate from its ownership. However, directors can also be members, meaning that the simplest Limited Company is a single member who owns and directs the whole company.

Limited Companies have a greater ability to finance themselves as they can use their assets as securities for loans. The stricter regulation on Limited Companies includes accountability to both shareholders and the public, as well as the need to provide annual reports to Companies House.

While Private Limited Companies are most common, Public Limited Companies are also possible. These companies can sell shares to the public, but attract even more regulation. This is to protect the public investor who is usually much less involved in managing the business than a private investor.

Limited Liability Partnership

A Limited Liability Partnership (LLP) is similar to a normal partnership, but with limited liability for the partners. Each member must register as self-employed with the HMRC and submit annual self-assessments. At least two members must be ‘designated members’, who are responsible for appointing auditors and filing accounts at Companies House.

LLPs have much more freedom than companies in arranging their internal affairs, making decisions, and sharing profits.

Community Interest Company

A Community Interest Company (CIC) is a form of company (limited by shares or guarantee) created for ‘social enterprises’. They want to use their profits and assets for community benefit. CICs have the flexibility and limited liability of companies, but also special features to make sure they serve the interest of the community:

  • CICs must submit statements and evidence every year to satisfy the ‘community interest test’.
  • CICs have an ‘asset lock’ to restrict the transfer of the company’s assets.
  • CICs have caps on profits paid to members

WHAT DO YOU NEED TO INCORPORATE YOUR BUSINESS?

In order to make your application to Companies House, you will need the following:

  •  A company name
  • Your business activity (SIC) code. You can find it here
  • A registered office address. CIGMA accounting offers a service for using our address if you do not have a registered office.
  • List of shareholders or guarantors
  • List of directors
  • List of people with significant control (PSCs)
  • Details about your capital investments

is a company registration number the same as a VAT number?

No, your Company Registration Number (CRN) is not the same as your VAT registration number (VRN). Neither of these are to be confused with your Unique Taxpayer Reference number (UTR). The UTR is a 10-digit number issues by HMRC. The CRN is an 8-digit number assigned by Companies House to all new limited companies or LLPs. 

What is a company registration number?

The Company Registration Number (CRN) is an 8-digit number assigned by Companies House to all new limited companies or LLPs. 

You can find your CRN on your company’s Certificate of Incorporation or by using this online tool from Companies House.

What is a vat registration number?

A VAT registration number contains 9 digits and is issued by HMRC. You must register for VAT is your total VAT taxable annual turnover is greater than £85,000. You can check wich products and services are exempt from VAT here.

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Need Assistance from an Accountant?

No matter your type of business, CIGMA Accounting can help manage your finances and tax obligations. Our organisation is registered with the Chartered Institute of Management Accounting (CIMA), and our accountants specialise in personal finance and cooperating with business management.

We believe small businesses can change the world, and love helping them work in the most tax-efficient way.

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 




About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

corporation tax deadlines; london accountant; farringdon accountant

Important Corporation Tax Deadlines You Need to Know

Important Corporation Tax Deadlines You Need to Know

As a business owner in the UK, staying on top of your financial responsibilities is crucial, and one of the key obligations is filing your corporation tax return accurately and on time. In this blog post, we will delve into the important deadlines associated with corporation tax, including the filing of tax returns and when you will have to pay corporation tax instalments. Understanding these deadlines is essential to avoid penalties and ensure compliance with HM Revenue and Customs (HMRC).

When are corporation tax returns due?

As a business owner in the UK, staying on top of your financial responsibilities is crucial, and one of the key obligations is filing your corporation tax return accurately and on time. In this blog post, we will delve into the important deadlines associated with corporation tax, including the filing of tax returns and when you will have to pay corporation tax instalments. Understanding these deadlines is essential to avoid penalties and ensure compliance with HM Revenue and Customs (HMRC).

 

Require accounting services?

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what is a corporation tax accounting period?

An accounting period is a period for which a company prepares its financial statements. It usually aligns with the company’s financial year, which may or may not be the same as the calendar year.

Accounting periods differ as companies are set up and begin trading at different times of year. Accounting periods generally cannot be longer than twelve months, though there may be exceptions in the first year of business or when restarting a business. 

To check your accounting period, you can refer to your company’s annual accounts, which will indicate the start and end dates of your financial year. Alternatively, you can access this information from Companies House or consult your accountant for assistance.

 

When do i need to pay corporation tax?

Aside from filing your tax return, it is crucial to meet the deadlines for paying your corporation tax bill. The deadline for payment depends on your company’s size, with most companies falling into one of the following categories.

Small companies

If your company qualifies as a small company, with profits below £1.5 million, the deadline for paying your corporation tax bill is typically nine months and one day after the end of your accounting period. For example, if your accounting period ends on 31st December, the payment deadline would be 1st October of the following year.

Large companies

For larger companies with profits above £1.5 million, the corporation tax payment deadline is generally divided into four quarterly instalments. The first instalment is due six months and 13 days after the start of your accounting period, while the last three are due every 3 months thereafter.

It is important to note that these deadlines may vary depending on certain circumstances, such as companies with different accounting periods, accounting periods shorter than 12 months, or if your company’s taxable profits exceed £20 million.

Experience the difference with Cigma Accounting, the premier accountants in Wimbledon. Contact us to learn more!

Need Assistance from an Accountant?

Working with a professional accounting firm like CIGMA Accounting can provide numerous benefits for your business. Not only can they help you stay on top of tax deadlines and avoid penalties, but they can also provide valuable financial advice and support.

Our experts at CIGMA are CIMA-registered Management Accountants. They specialise in working with businesses to form companies, create strategies, and making sure you’re on the right side of financial regulation.


Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

127 Farringdon Road

Farringdon

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EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

UK tax changes for 2023 including rates and allowances; london accountant

UK 2023 tax changes – rates and allowances


As the UK prepares to enter the new tax year on 6 April 2023, several significant changes to the tax system will come into effect. These changes will affect individuals, companies, and pensioners alike and are part of the UK government’s wider plan to increase revenue and reduce the country’s debt. In this article, we will examine the key changes that came into effect on 6 April and what they may mean for taxpayers.

Here’s a quick summary of the important changes:

The threshold for the 45% Additional Rate of income tax is being lowered to £125,140. Other tax bands have been frozen until 2028.
Corporation tax rates have been increased for companies earning over £50,000 in profits, up to a maximum of 25% for companies earning over £250,000.
The tax-free allowance for Capital Gains is being reduced from £12,300 to £6,000. This will decrease again in 2024 to £3,000.
The tax-free allowance for income from Dividends is being reduced to £1,000 and will fall again in 2024 to £500.
The lifetime limit on tax-free pension savings has been scrapped. This was previously £1,073,100.

 

Income tax changes

Income tax is the primary form of tax paid by individuals, other than the Value Added Tax (VAT) included in many goods and services. The rate of tax paid depends on your total taxable income. This taxable income can be reduced by claiming tax reliefs, such as when you have to pay for your own business travel costs.

Individuals have a tax-free Personal Allowance, which allows you to earn a certain amount of income tax-free. This amount is currently £12,570 and has been frozen until 2028. The Basic rate of income tax is 20%, and applies to those earning between £12,571 and £50,270. These thresholds have also been frozen until 2028.

The income threshold for the Additional rate of tax, which is 45%, has been lowered from £150,000 to £125,140. Here’s a summary of income tax rates and the income band changes:

Tax Band

Previous income band

Income band as of April 2023

Income Tax Rate

Personal Allowance

First £12,570

First £12,570

0

Basic Rate

£12,571 to £50,270

£12,571 to £50,270

20%

Higher Rate

£50,271 to £150,000

£50,271 to £125,140

40%

Additional Rate

Over £150,000

Over £125,140

45%

HOW WILL THIS AFFECT TAXPAYERS?

The lowering of the Additional rate threshold will obviously mean that more individuals will be paying the maximum tax rate of 45%. However, the freezing of the other income bands will also lead to more individuals paying higher rates of tax. When these thresholds aren’t increased along with inflation and wage growth, more and more individuals will find themselves within the higher tax brackets in future financial years.

It is important to note that the Personal Allowance is reduced by £1 for every £2 earned between £100,000 and £125,140. In essence, this means that those earning over £100,000 in the Higher rate band will be paying tax on a larger portion of their income, and those in the Additional rate have no Personal Allowance and pay a 45% tax on all of their income.

Individuals who find themselves being pushed into a higher tax band may benefit from setting up a salary sacrifice arrangement or by increasing their pension payments. This will decrease your taxable income and help keep you within a lower tax band.

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Corporation tax changes

Corporation tax is the tax paid by limited companies on their profits. The corporation tax rate was previously a flat 19%, but the 2023 Spring Budget introduces rates which change depending on a company’s amount of profits.

Companies earning under £50,000 in profits will continue to be taxed at 19%. Companies earning above £250,000 will be taxed at 25%. Companies earning between £50,000 and £250,000 can apply for Marginal Relief, which will make their effective tax rate somewhere between 19% and 25%, depending on their profits.

You can use HMRC’s online calculator to figure out how exactly this will affect your tax obligations.

 

tax-free allowance changes

For many forms of tax, individuals have a certain amount that is tax-free. These tax-free amounts are commonly called ‘allowances’, and include the Personal Allowance for income tax described above. The allowances for capital gains tax, dividends income, and pension payments all changed on 6 April 2023.

CAPITAL GAINS TAX

Capital gains tax is paid when you sell an asset that has increased in value since you bought it. Capital gains tax is paid on this increase in value, not the total value of the asset. Most people encounter this form of tax when selling property, but it also applies to company shares and other forms of investment.

The tax-free allowance for capital gains was previously £12,300 but has now been reduced to £6,000. It will fall again in April 2024 to £3,000.

DIVIDENDS INCOME TAX

Dividends are a way for companies to distribute profits to shareholders. You can click here for our full guide to dividends and how they are taxed.

The tax-free allowance for income earned through dividends has been lowered from £2,000 to £1,000. It will be lowered again in April 2024 to £500.

pension savings

Prior to April 2023, there was a limit on the amount of pension savings you could accrue without paying additional tax on it. This lifetime allowance was £1,073,100. This has been scrapped, meaning you do not have to pay tax if your lifetime savings exceed a certain amount.

It is important to note that there is still an annual allowance for pension payments, which is currently £60,000. This means you will pay tax on pension contributions which exceed £60,000 in a single financial year.

Maximum State Pension payouts have also increased in 2023, as they are meant to do every year. The State Pension amount is guaranteed to increase annually by whichever of the following measures is higher:

  • Average earnings,
  • Inflation, as measured by the Consumer Prices Index (CPI),
  • Or 2.5%.

With inflation at 10.1% as of September 2022, this had led to the highest ever single increase in the State Pension.

Those qualifying for the New State Pension will now receive a maximum of £203.85 a week (up from £185.15). Those who reached State Pension age before April 2016, and are on the older Basic State Pension, will now receive £156.20 (up from £141.85).

alcohol duty changes

HMRC’s Spring Budget also announced changes to the tax charged on alcoholic products. The policy document outlines how these changes will affect the average consumer:

  • 4% ABV pint of draught beer will be 0 pence higher.
  • 4% ABV 500ml bottle of non-draught beer will be 5 pence higher.
  • 5% ABV pint of draught cider will be 2 pence higher.
  • 5% ABV 500ml bottle of non-draught cider will be 5 pence higher.
  • 40% ABV 25ml serving of whisky will be 3 pence higher.
  • 5.4% ABV 250ml can of spirits-based RTD will be 6 pence lower.
  • 11% ABV 250ml glass of still wine will be 5 pence higher.


The document also states that individuals who drink stronger alcoholic products may pay more through the revised duty structure. Individuals who drink draught products in on-trade venues (such as pubs) will pay less tax than on the equivalent non-draught product in off-trade venues (such as supermarkets).

bottom line

These 2023 Spring Budget changes will see more individuals paying higher rates of income tax over the next 5 years. Companies earning over £50,000 annually will be paying higher rates of corporation tax. That said, 70% of companies, which is around 1.4 million businesses, are expected to remain unaffected by the change.

Individuals earning income through dividends or capital gains are also expected to pay more in total tax as the relevant tax-free allowances have been reduced and will be reduced again in 2024.

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About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Associated companies and Corporation Tax

There are two rates of Corporation Tax effective from 1 April 2023. Taxable profits up £50,000 continue to be taxed at the 19% Small Business Profits Rate. Taxable profits in excess of £250,000 will be taxed at 25%, the main rate. Taxable profits between £50,000 and £250,000 will pay a rate that gradually increases from 19% to 25% by claiming marginal relief.

These thresholds (£50,000 and £250,000) will be reduced for the number of associated companies and for short accounting periods.

A company is an ‘associated company’ of another company if one of the two has control of the other, or both are under the control of the same person or persons. 

The £250,000 limit will be divided by the total number of associated companies. For example, if two companies are deemed to be associated, both companies would pay the main CT rate of 25%, from 1 April 2023 at half the usual threshold, namely at £125,000 rather than £250,000. 

HMRC’s manuals make it clear that a company may be an associated company no matter where it is resident for tax purposes.

Source:HM Treasury| 27-03-2023


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Which profits add to a company's taxable income?

Which profits add to a company’s taxable income?

As a UK company, you are required to pay corporation tax on your taxable profits. However, it is important to note that not all profits are subject to corporation tax. It is also important to note that you do not pay tax on your total profit but rather your ‘taxable profit’. Find out which expenses can be deducted from total profit here.

Here are some examples of profits that are and are not subject to corporation tax:

Profits subject to corporation tax

  • Trading profits: This includes profits from the sale of goods or services.
  • Investment profits: This includes profits from investments, such as interest, dividends, and rental income.
  • Chargeable gains: This includes profits from the disposal of assets, such as property or shares.

Profits not subject to corporation tax

  • Dividends received: This includes profits received from shares in other companies, which are not subject to corporation tax but may be subject to other taxes such as income tax.

  • Statutory exemptions and reliefs: There are certain exemptions and reliefs, such as those for charities and small businesses, which may reduce or eliminate a company’s liability to corporation tax.

When is corporation tax due?

  • The timeline for UK corporation tax returns and payments is determined by the company’s accounting period, which is the duration that the tax return covers. Usually, companies must submit their tax returns within a year of the end of their accounting period.

    Crucially, the deadline for paying the corporation tax bill is much earlier, usually nine months and one day from the end of the accounting period.

    It is important to note that the rules surrounding corporation tax can be complex, and the above examples are not exhaustive. If you are unsure about whether or not your profits are subject to corporation tax, it is recommended that you seek professional advice from a qualified accountant.

Maximise your savings with top-tier accountants in Wimbledon. Contact Cigma Accounting for expert advice!

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 




About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Calculating taxable income for limited companies

Calculating taxable income for companies

As a UK company, you are required to pay corporation tax on your taxable profits. These are your total profits, minus business expenses that can be claimed as tax relief.

However, it is important to note that not all expenses incurred by your business can be taken off of your taxable profit. In this blog post, we will be discussing which expenses can and cannot be claimed as tax relief, and other kinds of tax relief available to UK companies.

Expenses that can be claimed

The following expenses can be claimed as tax relief, provided they are incurred wholly and exclusively for the purposes of your business:

  • Cost of goods sold: This includes the direct cost of any products or services sold by your business.
  • Wages and salaries: This includes payments made to employees, including bonuses and benefits.
  • Rent and rates: This includes the cost of renting business premises and business rates paid to the local council.

  • Capital expenditure: This includes the cost of purchasing fixed assets, such as property, cars, and machinery. These costs are claimed through capital allowances, and tax relief may have to be claimed over several years depending on the asset.
  • Travel expenses: This includes the cost of business travel, including train fares, mileage allowances, and subsistence expenses.
  • Repairs and maintenance: This includes the cost of repairing and maintaining business assets.
  • Marketing and advertising: This includes the cost of advertising your business and any marketing materials produced.
Which expenses can UK companies claim tax relief on?

Expenses that cannot be claimed

The following expenses cannot be claimed as tax relief:

  • Personal expenses: This includes any expenses not incurred wholly and exclusively for the purposes of your business.

  • Fines and penalties: This includes any fines or penalties imposed on your business.

Other kinds of tax relief available in the UK

Aside from claiming expenses, there are other forms of tax relief available to UK companies:

 

  • Research and Development (R&D) tax relief: This relief is available to companies that are carrying out research and development activities. The relief can be claimed as an additional deduction from taxable profits or as a cash payment.
  • Patent Box: This is a scheme that allows companies to apply a lower rate of corporation tax to profits earned from patented inventions.
  • Enterprise Investment Scheme (EIS): This is a scheme that provides tax relief for investors who invest in qualifying small and medium-sized companies.

When is corporation tax due?

The deadline for UK corporation tax returns and payments depends on the company’s accounting period. This is the period that their tax return will cover.

Generally, companies must file their tax returns within 12 months of the end of their accounting period. For example, if a company’s accounting period ends on 31 December 2021, its corporation tax return and any tax due must be filed and paid by 31 December 2022.

However, the deadline for actually paying your corporation tax bill is considerably earlier. Corporation tax payments are due nine months and one day from the end of your accounting period.

Elevate your financial game with the best Wimbledon accountants. Schedule a consultation with Cigma Accounting!

Need Assistance from an Accountant?

In conclusion, it is important to note that not all expenses incurred by your business can be claimed as tax relief. However, by understanding what expenses can be claimed, and by taking advantage of other forms of tax relief available, you can reduce your company’s corporation tax liability.

If you are unsure about what expenses can be claimed or what other forms of tax relief are available, it is recommended that you seek professional advice from a qualified accountant.

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 




About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Can I claim mileage or travel expenses?

Can I claim mileage or travel expenses?

As a UK company director or employee, you may be required to travel for business purposes. It is important to understand which travel expenses can be claimed as tax relief against corporation tax or personal income tax.

Here is a brief explanation of which travel expenses you can and cannot claim:

Can I claim travel expenses from HMRC? london accountants

EXPENSES WHICH CAN BE CLAIMED

  • Public transport: The cost of train, bus, and taxi fares for business-related travel can be claimed.

  • Car and mileage expenses: If you use your own car for business travel, you can claim a mileage allowance. Alternatively, you can claim the actual costs of using your car for business travel, such as fuel, insurance, and maintenance costs.

  • Subsistence expenses: You can claim the cost of food, drink, and accommodation when travelling for business purposes.

How to claim for mileage from HMRC

You can claim mileage from HMRC on your Self Assessment tax return if you are an individual or your Corporation Tax return if you are filing for a limited company . You can only claim for trips you had to make for work. Importantly, this does not include driving to and from your home and your work.

You can claim the ‘approved mileage rates‘ of up to 45p per mile for the first 10,000 miles you travel in a financial year, and 25p per mile thereafter. These rates include not just fuel costs, but also estimated maintenance and road tax.

EXPENSES WHICH CANnot BE CLAIMED

  • Non-business travel: Any travel that is not related to your business, such as commuting to and from work, cannot be claimed.

     

  • Entertainment expenses: The cost of entertaining clients or suppliers, such as meals or theatre tickets, cannot be claimed.

     

  • Non-business accommodation: If you decide to extend your stay and spend some time on leisure activities, any accommodation costs for non-business purposes cannot be claimed.

 

Elevate your financial game with the best Wimbledon accountants. Schedule a consultation with Cigma Accounting!

Need Assistance from an Accountant?

It is important to keep accurate records of all your travel expenses, including receipts and invoices, to support your claims for tax relief. If you are unsure about which travel expenses can be claimed or how to keep accurate records, it is recommended that you seek professional advice from a qualified accountant.

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 




About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Spring Budget 2023 – Creative industry tax reliefs

As part of the Spring Budget measures, the Chancellor announced that the government will extend the temporary higher rates for Theatre Tax Relief (TTR), Orchestra Tax Relief (OTR) and Museums and Galleries Exhibitions Tax Relief (MGETR) for two further years from 1 April 2023.

These reliefs are part of a collection of creative industry tax reliefs (CITR) that allow qualifying companies to claim a larger deduction, or in some circumstances claim a payable tax credit when calculating their taxable profits.

The sunset clause for the MGETR was supposed to come into force on 31 March 2024. It was also confirmed that the relief will be extended for another two years to 31 March 2026.

The headline rates of relief for the TTR and the MGETR will remain at 45% (for non-touring productions) and 50% (for touring productions). OTR rates will remain at 50%. From 1 April 2025, the rates will be 30% and 35%, and on 1 April 2026 the headline rates of relief for TTR and MGETR will return to 20% and 25%. The headline rates of relief for OTR will return to 25%.

There will also be reforms to the film, TV and video games tax reliefs which will become expenditure credits instead of additional deductions from 1 April 2024. 

Source:HM Treasury| 15-03-2023


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

Corporation tax from 1 April 2023

Barring any unforeseen changes being announced at next week’s Budget, the Corporation Tax main rate will increase to 25% from 1 April 2023 for companies with profits over £250,000. A Small Profits Rate (SPR) of 19% will also be introduced from the same date for companies with profits of up to £50,000, ensuring these companies pay Corporation Tax at the same rate as currently.

Where a company has profits between £50,000 and £250,000 a rate of Corporation Tax will apply that bridges the gap between the lower and upper limits. The lower and upper limits will be proportionately reduced for short accounting periods of less than 12-months and where there are associated companies.

The effect of marginal relief is that the effective rate of Corporation Tax gradually increases from 19% where profits exceed £50,000 to 25% where profits are more than £250,000.

The amount of Corporation Tax to pay will be found by multiplying profits by the main rate of 25% and deducting marginal relief. For the fiscal year 2023, the marginal relief fraction will be 3/200.

Source:HM Revenue & Customs| 06-03-2023


About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

guide to compliance obligations for UK companies

Your guide to UK Compliance Obligations

Companies need to follow rules set out by many different government bodies, written in various legislative documents. When setting up and running a limited company, you have to keep in mind all of the following:

  • Complying with applicable industry regulations set out by professional regulators – for example, the Financial Conduct Authority, the Office of Rail and Road, the Law Society or the Environment Agency
  • Complying with finance regulations – such as tax, payroll, HMRC, accounting, record keeping, Companies House and anti-money laundering regulations
  • Employment law and workers’ rights
  • Health and safety for workers and visitors to your offices/site
  • General Data Protection Regulation (GDPR) 
  • Contracts and agreements with third parties
  • Sector-specific permits, licences, permissions

It’s an expansive list! Our accountants at CIGMA Accounting are CIMA-registered Management Accountants. They specialise in working with businesses to form companies, create strategies, and making sure you’re on the right side of financial regulation.

CIGMA Accounting helps businesses around the UK grow while navigating the red tape. You can contact us here for a free quote.

Limited company obligations

This article is going to focus on the Companies Act 2006, which is the main piece of law setting out rules and expectations for limited companies. The Act outlines what are called ‘compliance obligations’ for companies. These are actions which companies are obliged to do in order to comply with the rules.

company records

1. Registered office

Companies must provide an office address which is able to receive letters and documents. This address must be in the country where the company was registered. You are legally required to display the address on all communications with clients, and your website.

2. Confirmation statement

Companies must file a Corporation Tax Return to HMRC, even if the company has no tax to pay. This must include details about:

  • Capital allowances claimed for business asset purchases
  • Gains on assets sold
  • Directors’ loans that are unpaid
  • Reliefs to be claimed
  • Any losses carried forward

Businesses with a trade volume over £85,000 must also register with HMRC for VAT.

Your final tax obligation is Pay As You Earn (PAYE). The PAYE system collects taxes from employees at the source. You as the employer are responsible for running this system. This involves deducting income tax and National Insurance Contributions.

3. Directors

Aside from financial records, companies are also expected to keep up to date details about their addresses, directors, and shareholders. Incorporated businesses must supply the following information to Companies House:

This is an annual report which must record your:

  • Office address
  • Business activity
  • Details of directors
  • Ownership and division of shares

4. Event Driven Reporting

Companies must inform Companies House of changes such as:

  • Change of directors, shareholders, or their personal details
  • Change of office address
  • Sales of shares
  • Change of company name or constitution


This is in addition to the three statutory registers which businesses must keep.

Companies must appoint at least one individual as a director. Directors are legally responsible for running the company and ensuring reports are made. The director of a UK company does not have to be a UK resident and can live anywhere in the world. Directors must supply their personal information, including an address, which will be publically available.

financial statements

A company’s annual accounts are prepared at the end of a financial year. These accounts must include:

  • A balance sheet of what the company owns, owes, and is owed by others
  • An account of sales, running costs, and profit / loss made over the year
  • A director’s report

This account needs to be sent to all shareholders, HMRC, Companies House, and anyone who attends the company’s general meetings.

You are also required to appoint an auditor for each financial year. An auditor’s job is to report back to a company’s members and the government about the company’s accounts. They are meant to give a true and fair view of the company’s financial records and whether they have been done properly.

Workplace pensions

UK companies are required to put certain employees into a pension scheme, a process called ‘automatic enrolment’. If you employ at least one person aged between 22 and state pension age, who earns more than £10,000 per year, this applies to you. 

Business licences

A business licence is a permit issued by the government or a professional body that outlines how specific business activities should be carried out. The most easily recognisable example is that of a liquor licence, which authorises businesses to sell alcohol and under what terms they can do so.

The list of licences is extensive, but you can use HMRC’s online tool to find out which licences your business may need.

steps to complaince obligations

Mastering your compliance obligations is essential for success – this step-by-step guide provides an introduction to understanding & fulfilling them!

Step 1 - Conduct a Self-Assessment and Risk Analysis
Analysis 20%

When getting started, first conduct a self-assessment and risk analysis to identify any current or potential noncompliance issues. Evaluate the nature and breadth of your operations, processes, policies and regulations that may affect your compliance needs. This assessment can identify any areas that require actionable strategies to help ensure compliance maturity at all levels of your organisation.

Step 2 - Research Your Relevant Regulatory Requirements and Standards.
Research 40%

Complying with regulations and standards is an essential step for keeping up with compliance obligations. It’s important to research the relevant regulations and standards that apply to your organisation, in order to understand exactly what is required from you in terms of compliance. Identify any applicable laws, industry standards, or government policies which are relevant to your operations and need to be adhered to, as not doing so could result in harsh penalties for noncompliance.

Step 3 - Identify Gaps Between Your Compliance & Regulations.
Identify Gaps 60%

Once you’ve identified the applicable regulations, standards and policies, it’s important to review your current compliance procedures and ensure that they meet the required expectations. Compare your existing process to the regulations and identify any gaps between the two. If there are any discrepancies or potential risks, it’s essential to address them as soon as possible in order to avoid penalties or other consequences of noncompliance.

Step 4 -Implement an Effective Compliance Program.
Implement Program 80%

Before developing your compliance program, it’s essential to ensure that you understand the expectations and obligations of each applicable regulation. Once you’ve done this, you can create a comprehensive compliance program which will guide you through the process of meeting all legal requirements. This program should include risk and compliance assessments, processes for monitoring and ensuring ongoing compliance, and plans for regularly tracking and improving performance.

Step 5 -Monitor, Measure, and Document Your Compliance Efforts.
Monitor 100%

Once you have developed a compliance program, it is necessary to continuously monitor, measure, and document any efforts to ensure that your organisation is compliant. All changes to processes made as part of ensuring compliance must be tracked and regularly assessed. Your organisation should also institute an effective system for processing internal complaints related to any violations of law or policy. This system will provide critical information that can be used by the compliance team when it comes to improving compliance efforts.

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 




About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

start-up loan success and new working rules for feb 2023

Start-up loan success and new work hours rules – HMRC updates Feb Q2 2023

The week of 13 February 2023 has seen positive reports from HMRC about its Start-up Loan Scheme and a record high of on-time self-assessment tax filings.

Importantly, new legislation is on the table that would give more power to those with zero-hour contacts. This new bill is aimed at mitigating the effects of forcing workers to be available at any time, with little warning.

Start-up Loan Scheme success

The Start-up Loans scheme was established in 2012, to provide support for new businesses that have been trading for less than 36 months.

The loans range from £500 to £25,000, and charge a fixed interest rate of 6% per year. Businesses also get free support writing up their business plan, and up to 12 months of free tutoring.

Young people (aged between 18-24 years old) have received 14 percent of loans since the scheme was established. Of the total of more than 100,000 loans, 40 percent have gone to women and one-in-five to people from Black, Asian, and other ethnic minority backgrounds.

With 12,382 loans in the North-West, 7,117 in the East of England, 5,616 in the East Midlands and 15,39 in Northern Ireland, as well as many more across all parts of the United Kingdom, the Start Up Loans scheme has seen the entire UK benefit, with total economic activity estimated to be around £5.3 billion.

Predictable working hours bill on the table

The Workers (Predictable Terms and Conditions) Bill, proposed by Blackpool South MP Scott Benton, could bring forward huge changes for tens of millions of workers across the UK to request predictable working hours.

The move, which would apply to all workers and employees including agency workers, comes after a review found many workers on zero hours contracts (i.e. contracts with no minimum working hours) experience ‘one-sided flexibility’.

This means people across the country are currently left waiting, unable to get on with their lives in case of being called up at the last minute for a shift. With a more predictable working pattern, workers will have a guarantee of when they are required to work, with hours that work for them.

What does this change for zero-hours contracts?

If a worker’s existing working pattern lacks certainty in terms of the hours they work, the times when they work, OR if it is a fixed term contract for less than 12-months, they will be able to make a formal application to change their working pattern to make it more predictable.

All workers and employees will have this new right if the bill gets parliamentary approval. However, they must first have worked for their employer for a set period before they make their application. This period will be set out in regulations and is expected to be 26-weeks.

Employers do have the option to refuse a request for a more predictable working pattern on specific grounds, such as the burden of additional costs to make changes, or there being insufficient work at times when the employee proposes to work. Workers will be able to make up to two requests a year.

Record number of taxpayers file on time

HMRC reports that more than 11.7 million people submitted their 2021-22 Self-Assessment tax returns by the 31 January deadline. This included over 861,000 taxpayers who left their filing until the final day and over 36,000 that filed in the last hour before the deadline.

Whilst this was the highest ever number of filings, there are still an estimated 600,000 taxpayers that have missed the deadline and are yet to file. Are you among those that missed the 31 January 2023 filing deadline for your 2021-22 Self-Assessment returns?

If you have missed the filing deadline, have a look at this post explaining the penalties and this post on how to reduce your penalties.

If you are unable to pay your tax bill, there is an option to set up an online time to pay payment plan to spread the cost of tax due on 31 January 2023 for up to 12 months. This option is available for debts up to £30,000 and the payment plan needs to be set up no later than 60 days after the due date of a debt.

Late tax payment interest rate increase

For those who have not filed and paid their taxes on time, your repayment amounts have just gone up. Luckily, CIGMA Accounting can help you with this process.

The Bank of England’s Monetary Policy Committee (MPC) met on 2 February 2023 and voted 6-3 in favour of raising interest rates by 50 basis points to 4% in a move to try and continue to tackle upward pressures on inflation. This is the tenth time in a row that the MPC has increased interest rates with rates now the highest they have been since November 2008.

This means that the late payment interest rate applied to the main taxes and duties that HMRC charges interest on increases by 0.5% to 6.50%.

When do these changes come into effect?

These changes will come into effect on:

  • 13 February 2023 for quarterly instalment payments
  • 21 February 2023 for non-quarterly instalments payments

The repayment interest rates applied to the main taxes and duties that HMRC pays interest on will increase by 0.5% to 3% from 21 February 2023. The repayment rate is set at the Bank Rate minus 1%, with a 0.5% lower limit.

Becoming an Authorised Economic Operator

Authorised Economic Operators (AEO) status is a recognised quality mark of businesses who deal with imports, and customs control procedures. Businesses that hold the AEO standard can demonstrate that their role in the international supply chain is secure and that they have customs control procedures that meet Authorised Economic Operator standards and criteria.

There are 2 types of status:

  • Authorised Economic Operator Customs Simplification (AEOC)
  • Authorised Economic Operator Security and Safety (AEOS)

You can apply for customs simplification or security and safety, or you can apply for both (Customs simplifications & Security and safety-AEOF).

What are the benefits of being an Authorised Economic Operator?

Businesses with AEOS status benefit from Mutual Recognition Agreements (MRAs). The UK negotiates MRAs with other customs authorities to reduce friction and excessive taxation. The UK currently has negotiated agreements with the EU, Japan, China and USA. Following Brexit, all Northern Ireland AEO authorisations continue to be recognised in the EU.

HMRC’s list of approved Authorised Economic Operator businesses has recently been updated and lists 1,237 businesses that hold status with HMRC.

Change in approved ISA managers list

Individual Savings Accounts (ISAs) are accounts for cash and investments (such as stocks and shares) for which you are not charged tax on interest, income, or capital gains. The maximum you can save in ISAs for the current tax year is £20,000.

 

HMRC releases lists of individuals and firms who it deems are able to manage ISAs satisfactorily. However, HMRC has not approved any ISA that the ISA manager may offer. Potential investors are advised to take independent advice if they’re in any doubt about the suitability of the ISA manager or of a particular ISA.

What can i hold in an ISA?

The list of investments that can be held in a tax-advantaged ISA also includes:

  • securities (including retail bonds) and shares issued by housing associations and other co-operative societies or community benefit societies (registered societies – formerly known as industrial and provident societies);
  • a broader range of securities issued by companies, including those admitted to trading on certain Small and Medium Size Enterprise (SME) market; and
  • shares in a wider range of investment trusts.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

Better Space

127 Farringdon Road

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.

how to register a company in the UK london

How to register a company in the UK

Perhaps you’re self-employed and looking to expand your business. Or maybe you’re looking to start a new endeavour from scratch, and want to raise capital by selling shares. Whatever the reason, you’re thinking about creating an incorporated business, often called a company.

There are several steps to go through to establish and register a new company, but first and foremost is understanding what you’re signing up for.

What are the advantages of forming a company?

A limited company is a kind of incorporated business, meaning that the business is considered a separate entity under the law. The business’ finances are separate from the owners’.

Companies have access to different tax rules and options for raising funds, but are subject to stricter regulations. This includes more accountability to people who have invested in the business, as well as to the public. It also means having to submit more reports and documents to HMRC and Companies House.

But there are many kinds of legal businesses, which we break down here. If you’re aiming to be the sole owner and don’t need much external funding, being a sole trader is likely more appropriate. If you have a few external investors who won’t have any control of the business, a limited partnership may be best.

Choose a Company Name London

Choose a name

You must choose a name for your company, which must usually end in ‘Limited’ or ‘Ltd’. You can also use the Welsh equivalents Cyfyngedig’ and ‘Cyf’ if you registered the company in Wales.

A name is considered the ‘same as’ another if the only difference is punctuation, special characters, or words that look similar or mean the same thing. You will need to be part of the same group as or have written consent from a company to use a name considered the ‘same as’ its own.

Your company name also cannot be offensive, or use any legally protected terms like ‘Accredited’. You can check whether a name is already in use here.

Choose a Director for your Company London

Appoint a director

You will need to appoint at least one director for the company. They will be legally responsible for keeping company records, filing tax returns, and paying corporation tax. Directors do not have to live in the UK but the company must have a UK registered office address.

Get a physical office address

What if I don't have a physical office?

All limited companies need to have a ‘registered office address’. However, this does not mean you need to own or rent a building just for this use.

At CIGMA Accounting we offer services which allow you to use our address as your company’s registered address. We also offer services that can take you all the way through the incorporation process. 

Contact us here to get a free quote for company formation in London and across the UK.

LISTING PEOPLE WITH SIGNIFICANT CONTROL (PSCS)

Decide on shareholders or guarantors

Most limited companies are ‘limited by shares’. This means they’re owned by shareholders, who have certain rights and ‘limited liability’ – they only stand to lose the money they have paid in for their shares.

Company profits are usually divided between shareholders according to what percentage of the shares they own, referred to as dividends.

A company limited by shares must have at least one shareholder, who can also be the director. The price of an individual share can be any amount, and usually give their holders one vote on company decisions per share.

Companies can also be ‘limited by guarantee’. Instead of shareholders, these companies have guarantors who have promised to pay a set amount of money if the company cannot pay its debts.

LISTI PEOPLE WITH SIGNIFICANT CONTROL (PSCS)

Listing people with significant control (PSCs)

A person with significant control of your company (PSC) is someone who:

  • Holds more than 25% of shares
  • Has more than 25% of voting rights
  • Can appoint or remove the majority of directors


You will need to submit a list of PSCs when you register your company with Companies House. You will need details about your PSCs such as their date of birth and home address. You can find the full list of required information here.

Company Registration London

Company agreement documents

To register your company, you will need a ‘memorandum of association’ and ‘articles of association’.

The memorandum of association is a legal statement signed by all initial shareholders or guarantors agreeing to form the company. This will be created automatically if you register online.

The articles of association are written rules about running the company agreed by the shareholders or guarantors, and directors. You can use premade standard articles or write up your own.

CHECK WHICH company RECORDS YOU NEED TO KEEP​

Check which records you need to keep

Aside from your PSC list mentioned earlier, you must keep other records about the company and its accounting.

Among others, you will need to keep documents recording:

  • The directors and shareholders
  • The results of shareholder votes
  • Company loans and repayment dates
  • Bought and sold shares

 

Your accounting records will need to include the following, though this is not the full list:

  • All money received and spent
  • Details of assets
  • Debts the company owes or is owed

 

You are expected to keep records for at least six years.

Register Your UK Conmpany

Register your company

To register your company, you will need to provide an office address. This address must be a physical address in the UK and be in the same country that the company is registered in.

You will also need to use this document to check what your business’ SIC code is. The ‘standard industrial classification of economic activities’ (SIC) describes the kind of business or trade your company engages in.

You can then use this service to register your company with Companies House. You will also be registered for Corporation Tax at the same time. For the registration, you will need personal details about shareholders or guarantors, such as their town of birth and telephone number.

If you need any assistance with incorporating your business, or registering for Corporation Tax, our CIMA-registered chartered accountants would be happy to assist.

Wimbledon Accountant

165-167 The Broadway

Wimbledon

London

SW19 1NE

Farringdon Accountant

Better Space

127 Farringdon Road

London

EC1R 3DA



About the Author
Haroon Muhammad

Haroon Muhammad boasts 17 years of comprehensive experience in tax, financial services, and local government. His sheer love for tax drives his mission to save clients money and optimise their financial strategies. Haroon is dedicated to navigating complex financial landscapes with precision and delivering exceptional results for his clients.