Frequently Asked Questions

Personal Taxation – When I should tell HM Revenue and Customs about my Self-employment?

When you start doing any profit making business, you must notify HM Revenue & Customs by 5th October following the end of the tax year.

Personal Taxation – What is UTR Number?

Unique Tax Reference Number, in short, UTR Number is 10 digits number assigned by HM Revenue and Customs which implies you are registered with HM Revenue and Customs as a self-employed business.

Personal Taxation – How I have to keep my records? 

The best way is to have a business bank account and bank all the income and relevant expenses of the business. That way, you can pick your income and expenses from your bank account. If not, you can make a note in a register about how much you earned and to earn that much how much expenditure you had to incur. In both ways, you need to keep bills and invoices of your purchases and expenses. If you are Excel literate, you can also use it to list down your income and expenses. You also have to make a note of your fixed assets and liabilities.

Personal Taxation – How much taxes I need to pay and when, if I am self-employed? 

If you are self-employed, you have to pay Class 2 National Insurance, Income tax and Class 4 National Insurance. The rates of above tax and National Insurances change year to year. You need to submit and pay your tax liability and class 4 National Insurance on or before 31 January following the end of the tax year. You have to pay class 2 National Insurance half-yearly after you receive payment request from HM Revenue and Customs.

Personal Taxation – How I can close my self-employment? 

In order to close your self-employment, you need to call HM Revenue & Customs and tell them since when you ceased to be self-employed. You also have to mention the ceasing date in your final tax return. You also have to tell National Insurance Unit about the closure so that they would not send you Class 2 NI bill there afterwards.

Corporation Tax – What is corporation tax? 

Corporation tax is tax on company’s taxable net profit. Once you decide to run your business as a company, you have to pay corporation tax provided you make taxable profit.

Corporation Tax – How the corporation tax works? 

When you incorporate a company, you need to tell HM Revenue & Customs about the information relating to the company on CT41G form. Then, you will receive Company’s UTR Number. The company’s account will be prepared on the basis of its year end. The corporation tax has to be paid by 9 months and 1 day after the year end. CT600 is company’s tax return. It has to be submitted by 1 year after the year end.

Companies House – What are the compliances requirements for a company? 

Your accountant has to prepare company’s accounts annually and submit to Companies House within 9 months (in case of limited company). You also have to submit Annual Return to Companies House annually. This is to update Companies House about the changes of any information relating to the company.

VAT – Do I have to register my business with VAT? 

You only have to register your business with VAT if your supplies are taxable supplies and your turnover exceeds the set thresholds which changes year on year. You can also register for VAT voluntarily if you need to. In this case, you need to satisfy HM revenue & Customs why you need to do so.

VAT – Do I have to pay everything I collect as VAT? 

Not necessarily. If you have paid VAT on your supplies, you can set them off with whatever VAT you collected on your taxable supplies and you can pay the difference.

VAT – Can I deregister VAT? 

Of course you can. If you registered voluntarily based upon estimated turnover and later on you could not earn your expected income and you think you cannot exceed VAT threshold, you can apply for de-registration.

Advisory – How to decide whether to do business as self-employed or company? 

In case of self-employed, you are only accountable to HM Revenue & Customs where as in case of Company, you are accountable to both Companies House and HM Revenue & Customs. If your taxable net profit is above Class 4 National Insurance exemption level, you can save tax by doing business in the form of a company. You need to compare tax liability and professional fee in both the structures and choose the one with the lower cost.

Advisory – How to take best-pay mix out of the company to effectively plan overall tax? 

In order to do so, we need to look at your other income as well. If your total income is below Basic Rate Threshold, your all income will fall under 20% regime. If you are director of a company, you can take minimum salary whereby you do not have to pay PAYE and NI and rest you can take as dividends. This way, you can save good amount of tax.

Advisory – Whether it is better to have an accountant from the very beginning? 

In our experience, we have seen clients who come after a while and mess up all the things. In many cases, they even do not know what they have to do and what are the consequences of not complying with Companies House and HM Revenue & Customs periodic returns. In some cases, they have to pay penalty as well. Just to avoid all this situations and to have peace of mind from the very beginning, it is always advisable to have an accountant with you.

Reasons Why us – Why I should choose SNP Plus, Chartered Certified Accountants? 

  • Competitive in terms of price and perfection.
  • Special care to the clients.
  • Very personalised service directly from partner having more than 17 years of experience in this field.
  • Advising you about your business beyond the numbers.
  • Always thinking how to reduce client’s overall tax in a very legal way.
  • Promoting your business among other clients and in societies.
  • Relaxed payment terms to help you manage your cash-flows.
  • And many more.

If you got other questions which is not answered above, then contact us:

SNP Plus
Accountants and Tax Advisors

Talbot House
204-226 Imperial Drive
Rayners Lane, Harrow
HA2 7HH, United Kingdom
Mobile: 07932949300
Telephone: 02088724185
Fax: 02088724186