For small business owners like you and me, understanding income tax can be a tricky process. That’s why our expert small business tax accountants in London can help you with some really useful tips. Moreover, along with the tax bands, there are plenty of other rules and regulations that we need to follow and comply to stay away from any sort of penalty from the UK tax department. Whether you are an entrepreneur or a small business (belonging to any industry/domain), then this blog will help you understand how to file taxes in the UK. Here we have penned down some useful tips by the top-rated small business tax accountants in the UK.
Every country has different tax bands for businesses and individuals who are earning above the decided threshold. Similarly, in the UK, there are different and predefined sets of rules that determine how income tax is collected. Tax bands in England, Northern Ireland, and Wales slightly vary from rates in Scotland. However, if you are new, then the team of UK small business tax accountants is here to help you educate and understand what tax is, what are tax bands, and how to file taxes in the UK.
What is the income tax system in the UK?
Just like other countries, the United Kingdom also has a predefined and clear income tax system in place for its citizens and businesses (and everyone who earns in the UK). The amount that you pay as a tax to the UK government is utilized in providing basic facilities and security. The tax that you must pay totally depends on the income you earn annually.
There may be a single or different source of income for you, and based on your source of income, there are different ways income tax is collected including the following:
- For salaried employees is Pay-as-You-Earn (PAYE)
- For independent professionals or freelancers is a Self-assessment UK tax return
- Deductions at source, where tax is taken from the bank/building society interest before the interest is paid to you
- In some cases, one-off payments
If you have any questions/doubts, then you can get them resolved by communicating with Small Business Tax Accountants at Affinity Associates. The latter is one of the leading Tax Accounting Services providers in the UK.
Who must pay income tax in the UK?
Both, residents and non-residents (earing in the UK), have to pay income tax within the country. According to British Lawn, you are eligible to pay tax if you:
- If you stay in the UK for at least 183 days during the tax year
- Your main home is in the UK, and you have owned, rented, or lived in it for a total of at least 91 days, including 30 days in the tax year under consideration
- You work full-time in the UK for any period of 365 days with no significant break of 31 days or more. At least 274 of the days must be in the tax year under consideration.
Learn How To File Taxes From Small Business Tax Accountants in London?
Most UK citizens who fall under the predefined tax bands pay their tax via the PAYE system. Pension providers and employers use PAYE to deduct income tax and other applicable charges before they pay pensions or wages. You can refer to your pay slip or income statement for more details.
Self-Assessment Tax Returns
Last year, approximately. 11.5 million people in the UK filed a self-assessment tax return. You can also file a self-assessment return if you fall under the defined criteria such as:
- If you are self-employed and earn more than £1,000 per year
- If you are in a business partnership
- If you are earning more than £1000,000/annum as an employee or pensioner
- If your claim child benefit and your income (or your partner’s income) is over £50,000
- If you are earning over £2,500 from other untaxed income such as rentals, investments, foreign sources, etc.
What is the deadline for self-assessment income tax in the UK?
If you are salaried or if you are receiving a private pension, your company or pension payer will pay applicable tax to the government. However, if you are self-employed or need to claim additional income or tax refunds, then you will have to file a self-assessment tax return and pay your own UK income tax.
The deadline to register for self-assessment in any tax year is 5 October of the following year. So, if you want to be evaluated as a sole proprietor for 2021–2022, for instance, you have until 5 October 2022 to register. You must file your returns before 31st October 2022 (if you are doing so on paper) or 31st January 2023 if you are filing online. If you need any help in tax preparation, tax filing or anything related to maintaining your accounts and books professionally, then please feel free to contact us for help and support.
How small business tax accountants in London can help?
Small business tax accountants can help you in a number of ways such as:
- Manage your accounts
- Manage your books
- Prepare VAT
- Filing of VAT
- Offer financial advice
- Preparing financial report
The role of a small business tax accountant is not confined to just offering you professional accounting services, they can help you will almost everything related to your company’s finances and taxes. So, if you are not well-versed with the UK tax rules and compliances or find it tough to manage your company’s accounts on your own, then get in touch with experienced small business tax accountants in the UK at Affinity Associates. The latter has a team of UK small business tax accountants to help you focus on your business activities.
If you want to learn more about Affinity Associates, how it can help, what are the charges of accounting services, and what other services are offered by Affinity Associates, please check out our official website.