Business Accountancy And Tax In The UK

Business Accountancy And Tax In The UK
The accountancy, tax, Value Added tax (VAT) and other financially-related laws applied to UK businesses are complicated, and at present subject to major changes, making a nightmare for new business owners unfamiliar with the UK system. The safest way to deal with this situation without incurring a visit from the Inland Revenue is to employ a reputable firm of local accountants.

For example, if your business has employees, there are Pay as You Earn (PAYE) tax and National Insurance payments to be deducted from their monthly salaries and remitted regularly to the correct government office in your area, with comprehensive records kept by your company.

If your business is involved in offering goods or services, VAT at 20 per cent must be charged on every invoice and remitted quarterly, although VAT paid on goods and services supplied to your company can be reclaimed. From January 2012 all VAT returns must be made online. Registration for VAT is compulsory for businesses turning over more than ?73,000 in the previous 12 months.

Corporation tax is paid on all registered company profits in the UK, at a main rate of 28 per cent in 2011, with a number of other rates applied dependent on the business’s profits. For example, the Small Profits Rate in 2011 of 21 per cent applies to companies whose profits do not exceed ?300,000 a year.

A competent accountancy firm will work on legally reducing the amount of corporation and other government taxes due annually and can usually save more money than they cost to employ, by writing down the values of equipment, etc. They can also ensure that no financially embarrassing mistakes are made on the company’s annual tax returns, an important aid as the Inland Revenue is notoriously unfriendly as regards unintentional errors.

More information can be obtained on the relevant government website, http://www.hmrc.gov.uk/ct/index.htm, but for those who are not familiar with UK tax laws and/or experienced in the use of accounting software, the use of professional advice is highly recommended, even if your business is a smaller start-up or a local franchise.

Migrants buying into already established larger businesses should also check that those dealing with the company’s tax, VAT, PAYE and National Insurance deductions and payments are up-to-date with possible changes in the system. Failure to comply can result in long, stressful investigations and huge fines.