Taxation for an LTD company in UK

Setting up a Private Limited Company (LTD) in the United Kingdom comes with various tax obligations and requirements. Here is a brief overview of running an LTD in the UK, covering taxes for the legal entity, types of accounts, financial statements, payrolls, and VAT declarations, along with their respective deadlines and periods.

Corporate Income Tax:

Private limited companies are liable to pay Corporation Tax, which is assessed on their profits.

According to HMRC rules in force from 1 April 2023, the main Corporation Tax rate is 25% for profits over £250,000. A small profits rate of 19% applies to profits of £50,000 or less. For profits between £50,000 and £250,000, Marginal Relief applies (the £50k/£250k limits are proportionately reduced for short periods and by the number of associated companies).

Deadlines (helpful to note): pay CT 9 months and 1 day after the end of the accounting period; file the Company Tax Return (CT600) within 12 months after the end of the period.

Annual Financial Statements:

LTDs must prepare annual financial statements that comply with the UK Generally Accepted Accounting Practice (GAAP).

These financial statements should include a balance sheet, income statement, and notes to the accounts.

Financial statements must be filed with Companies House within nine months of the company’s financial year-end (for first accounts there are special, longer limits; the guidance page also confirms the 9-month rule for private companies).

Payroll and Employee Taxes:

If your Private Limited Company has employees, you are responsible for operating a payroll system. This system will withhold Income Tax (PAYE) and National Insurance contributions (NICs) from employee salaries.

Real-Time Information (RTI) reports must be submitted to HM Revenue & Customs (HMRC) each time employees are paid — the Full Payment Submission (FPS) is due on or before payday.

Value Added Tax (VAT):

If your company’s taxable turnover exceeds the VAT registration threshold, you must register for VAT. From 1 April 2024, the registration threshold is £90,000 (12-month rolling turnover).

VAT returns should be filed with HMRC regularly, typically on a quarterly basis.

The VAT return and payment deadline is one calendar month and 7 days after the end of your VAT accounting period (allow time for the payment to clear).

The standard VAT rate is 20%. For certain types of goods and services, a reduced rate of 5% is applied (some supplies are zero-rated under separate rules).

Annual Confirmation Statement:

Private limited companies must also submit an annual confirmation statement to Companies House. You must file at least once every 12 months, and the statement must be filed within 14 days of the end of your review period.

Summary

Operating a Private Limited Company in the UK involves fulfilling several tax and financial reporting obligations. These include paying Corporation Tax on profits (with small profits rate, marginal relief and associated-company rules), preparing and submitting annual financial statements to Companies House, managing payroll and employee taxes under RTI, and adhering to VAT regulations (including the £90,000 registration threshold and the one-month-plus-7-days filing/payment rule). It’s essential to stay informed about changes in tax rates and deadlines to ensure compliance and maintain financial health. Seeking guidance from a qualified accountant or tax advisor can be invaluable in navigating the intricacies of taxation for LTD companies in the UK.

Staying organised with these tasks helps you avoid penalties and maintain full compliance. Our team is here to support you with these responsibilities and guide you through every step, ensuring your company operates smoothly and with confidence