All limited companies in the UK have to pay corporation tax. This also includes any clubs and societies with membership fees, trade associations and any groups of people with their own businesses. Those that are self-employed as sole traders do not have to pay corporation tax and, instead, must pay income tax on their profits via self-assessment. In a limited company, it is the company director’s responsibility to ensure that the right amount of corporation tax is paid by the company and that tax returns are submitted to HMRC on time. Company tax returns must be completed once a year using the form CT600.

Corporate tax returns must be submitted at some point between when your statutory filing date is due and when your company’s financial year ends. You may, in some instances, be required to pay corporation tax before your return date is due. If you have a company with a turnover of £1.5 million or more, corporation tax must be paid within nine months and one day following the end of your annual accounting term. Some corporate tax can be paid in instalments depending on the profit made and the circumstances.

Registering with HMRC

Once you have set up your Limited Company, you must inform HMRC and register your business within three months of trading. There are various statuses that HMRC use to determine whether or not a business is officially trading, including “active”, “non-trading”, “trading” and “dormant”. You must check the status of your business and ensure that the correct term is used to describe your business activity. During the registration process with HMRC, you will be required to provide several details including the start-up date of the business (when it was founded), company name, company registration number, the address/location of any business premises, the type of business you are undertaking, the date your annual accounts are made up to and a home address for the company director/s.

Filing Your Corporation Tax Return

HMRC doesn’t calculate tax bills for companies in the same way that it does with self-employed individuals. A limited company has to calculate its own tax. The calculations must be sent to Companies House and HMRC. Your CT600 form must include several details including your company registration number and name, details of the registered office, tax reference number information and details of all profits made — as well as details of any allowances and tax reliefs the business is entitled to.

Even if your company doesn’t owe any corporation tax, you will still need to submit a tax return to HMRC. If your company has dissolved and is no longer trading, it should have the “dormant” status applied by HMRC. HMRC will then inform you that you no longer have to pay corporation tax.

Late Payments and Penalties

You must be organised in the day to day running of your company’s finances. Missing important dates regarding corporation tax and your tax return can have serious consequences. HMRC enforces financial penalties on companies that do not pay their corporation tax on time. Even if you file your return a day late, you will have to pay a fine of £100. If you are six months late with your payments, HMRC adds a 10% penalty onto the amount already owed. If you are 12 months late, this goes up another 10%. You will also be charged interest on the amount owed if your tax bill is paid late. HMRC has the power to recover funds using enforcement, including collecting money owed through directors pensions and savings, taking funds from bank accounts, making your company bankrupt, taking you to court or closing down your company.

If your company is having difficulties paying its corporation tax bill, HMRC suggests getting in touch as soon as possible so that you can set up a payment plan. If your tax return is inaccurate and HMRC feels that errors have been made — either deliberately or mistakenly — you could be fined. If the mistake was as a result of carelessness, a charge of up to 3% on top of the original tax bill could be incurred. If the mistake was deliberate and you tried to conceal it, you may be charged up to the full amount of your tax bill again in fines. Being honest at all times and ensuring that your corporation tax is calculated accurately is very important.

Legally Reducing Your Corporation Tax Bill

There are various ways that you can legally reduce your bill for corporation tax – something that many companies take advantage of. Companies can deduct expenses in the same way as a self-employed individual. These costs get taken off of your tax bill. The expenses have to be for legitimate costs incurred by the business, such as stationery, company travel, etc. If you own the company, paying yourself a wage can also count as a business expense, so paying yourself a wage is a good way to reduce your corporation tax bill. Some limited company owners pay themselves through dividends, as these are charged at a lower rate of tax than income tax. However, dividends are not eligible for a claim as a business expense. Another great way to reduce your bill is to make an early tax payment to HMRC.

We can provide professional advice on all-things corporation tax, whenever you need it. Try our all-inclusive core accountancy service today.

The post What Is Corporation Tax in the UK, and Who Pays It? appeared first on Mint Formations Blog.

However, starting a business can be a busy time, and the admin work, such as searching for a registered office address provider or hiring new staff, quickly piles up. Trying to wade through figures and fees to select the best bank for your business account can be overwhelming and is just another job to do.

If you’re feeling stuck, keep reading, as we’ve summarised the data from nine UK banks below so you can compare the numbers and decide what works best for your company and individual finances.

Best business banking accounts

Whether you’re looking for the best business bank account for sole traders or one with a long free-banking period, we’ve done the leg work so you don’t have to. Here’s everything you need to know:

HSBC

Starting your business with HSBC will give you free banking for the first 12 months. So, you’ll pay no maintenance fees or payments if standard charges cover your account. You can choose a business current account that offers electronic banking or small business tariffs that suit your business banking practice.

Santander

With Santander, you can choose between a Business Current Account and a 1|2|3 Business Current Account. However, you can currently only open a business account if you’re an existing customer.

The main advantage of the 1|2|3 account is the cashback feature, where the rate of your received cash back depends on the amount you deposit into your account each year. This rate varies between 1, 2 or 3%. Santander will pay this cashback on the first £10,000 deposited into your account during the year.

TSB

TSB provides 30 months of free business banking for sole traders and limited companies. TSB supplies a free Square reader with each business account, and there are no fees to pay on your first £1,000 of sales.

Natwest/RBS

Natwest offers business owners a choice between its “Startup” and “Business” accounts.

The Startup account is open to companies that have been trading for less than 12 months and have a turnover of less than £1 million. This account offers free banking for 24 months before your business shifts to the Standard Published Tariff.

The Business account is for companies trading for over a year with a turnover of up to £2 million. Its benefits include services such as FreeAgent accounting and Business Boost and a dedicated Relationship Manager.

Lloyds/Bank of Scotland

New businesses with an expected turnover of less than £3 million receive 12 months of free day-to-day banking with the Business Current Account from Lloyds and Bank of Scotland.

All business accounts have free electronic payments and a simple pricing structure. Beneficial products like business loans, insurance, overdrafts and charge cards offer additional support.

Barclays

Barclays offers both startup and standard business accounts. With its startup business account, you’ll receive free banking for 12 months. Your business will also benefit from the expert advice of Barclays’ Business Direct team to support and help you grow during the initial months. Barclay’s team will help you outline your business strategy and cash flow management and guide you through international lending and trading.

Virgin money

Yorkshire Bank and Clydesdale Bank have been brought together under the Virgin brand.

They provide a healthy free banking period of 25 months, covering free day-to-day banking for startups and those switching accounts. Your business must have a turnover of less than £6.5 million with an annual cash transaction limit of £250,000.

Monzo

Unlike other business bank accounts, Monzo boasts no account fees on their lite tariff. For larger businesses or those wanting to access more features such as tax pots, integrated accounting, invoicing and multi-user access, it’s a small fee of £5 per month for Business Pro.

Metro bank

Metro Bank has a specialist account for startups and SMEs who have a turnover under £2 million, as well as for larger, experienced businesses.

If you maintain a balance above £6,000 for the whole month, Metro Bank will waive your monthly account maintenance fee. Otherwise, it’s a monthly fee of £6. If you stay above £6,000, you’ll get 30 fee-free UK transactions a month, with 30p per transaction for amounts above that figure. Accounts that go under £6,000 will pay 30p per UK transaction.

Once you’ve selected the best business bank account for your company, you need certain key documents to apply. These documents include proof of identity and address. You’ll also need your Companies House registration number (if you have one), financial information, and full details of company directors and partners.

To find out more about the best business bank account in the UK and to receive expert advice and guidance, contact Mint Formations today.

The post The 9 best business bank accounts in the UK appeared first on Mint Formations Blog.

It can seem daunting, but learning about tax doesn’t have to tax your brain. Here we will explore the different types of UK business taxes, including Corporation Tax, Value Added Tax (VAT) and National Insurance Contributions (NICs), so you can fly through your tax returns. 

Different types of UK business taxes

Corporation tax

Corporation Tax is a tax levied on the profits of limited companies and some organisations operating in the United Kingdom. It applies to resident and non-resident companies with a permanent establishment or business activities within the UK. The tax is calculated based on the company’s taxable profits, which are the profits earned from its trading activities, investments and any other sources of income.

Corporation tax (CT) is forecast to raise £74.4 billion in 2022/23. It is the fourth largest contributor to government tax revenues after income tax, National Insurance contributions (NICs) and VAT. Nearly all corporation tax receipts are accounted for by onshore CT, which is forecast to raise £68.1 billion in 2022/23.

Corporation Tax has several key features that small business owners should be aware of. 

In the Spring 2021 Budget, Chancellor Rishi Sunak significantly changed the corporate tax system. The main highlights include raising the tax rate from 19% to 25% for companies with profits over £250,000, starting from April 2023. 

A separate rate of 19% was introduced for companies with profits under £50,000, with a tapered rate for businesses earning between £50,000 and £250,000. The budget also introduced a “super-deduction” allowing companies to claim a 130% first-year capital allowance for new plant and machinery investments until March 2023. This initiative aims to encourage business investment and stimulate economic growth. 

Additionally, a two-year extension was granted for “loss carry-back,” enabling companies to offset losses against previous years’ profits. The reforms were initially projected to raise £11.9 billion in 2023/24, increasing to £17.2 billion by 2025/26. However, in September 2022, the plan to increase the tax rate was cancelled but later reinstated by Chancellor Jeremy Hunt in October 2022 for implementation from 6 April 2023.

Value added tax (VAT)

Value Added Tax (VAT) is a consumption tax levied on the value added to goods and services at each stage of production and distribution. It is charged as a percentage of the final selling price and is collected by VAT-registered businesses on behalf of the government. Small companies must determine whether they need to register for VAT based on their taxable turnover.

For most small businesses, the standard VAT rate of 20% applies to their products. However, two other types of VAT may apply:

• Reduced Rate VAT: This is a 5% VAT rate that applies to luxury necessities such as car seats for children, energy-saving activities, certain fees for charities and mobility aids for older adults.
• Zero Rate VAT: This is a 0% VAT rate where no VAT is charged on sales. Zero-rated products and services are considered essentials and include various types of food, children’s clothing, bookings, medical supplies and equipment.

It is important to record both these rates, including zero-rated products, on your VAT return. However, goods and services exempt from VAT, such as medical services, finance and credit and charity fundraisers, do not need to be recorded for VAT purposes.

You can refer to the government website for a comprehensive list of items categorised under reduced rate, zero rate and VAT exemption.

VAT registration thresholds determine when a business is required to register for VAT. As of the current threshold, you must register for VAT if your taxable turnover exceeds £90,000 in any 12-month period. However, it’s important to note that these thresholds are subject to change, so it’s crucial to check for any updates from HM Revenue and Customs (HMRC).

VAT operates through a system of input and output tax. Input VAT is the VAT paid on purchases and expenses related to your business activities, while output VAT is the VAT charged on your sales. The difference between the two (output VAT minus input VAT) is either payable to or reclaimable from HMRC, depending on the situation. Understanding how to calculate and account for input and output VAT is vital for managing your VAT obligations effectively.

Although taxation is mandatory for all UK businesses, not all companies must register for VAT if they do not meet the threshold. The Office for National Statistics (ONS) reports that only 45% of businesses are registered for VAT or Pay As You Earn (PAYE). However, some companies voluntarily register for VAT to take advantage of the benefits associated with being a VAT-registered business.

Related Reading: The Advantages and Disadvantages of Voluntary VAT Registration

National insurance contributions (NICs)

National Insurance Contributions (NICs) are payments made by employees, employers and self-employed individuals to fund various state benefits and services. NICs are relevant to small business owners who are self-employed or have employees. They help fund essential benefits like the state pension, statutory sick pay and maternity pay.

NICs are divided into different classes, each with its own rules and rates. Employees and employers pay Class 1 NICs, while Class 2 and Class 4 NICs apply to self-employed individuals.

Class 1 NICs are calculated based on the employee’s earnings, and the employer and employee contribute to these contributions. Class 2 NICs are flat-rate contributions paid by self-employed individuals who earn above a certain threshold. Self-employed individuals pay Class 4 NICs on their profits above a specific threshold.

NIC class (Tax year 2023/2024)

NICs are subject to changes and updates by the government. It’s essential to stay informed about any recent updates or changes to ensure compliance with your NICs obligations. Changes could include adjustments to rates, thresholds or additional allowances that may impact small business owners.

Understanding the different types of UK business taxes is essential for small business owners to manage their tax obligations effectively. By having a solid grasp of Corporation Tax, VAT and NICs, you can ensure compliance, make informed financial decisions and maximise available tax reliefs and allowances.

Tax obligations and deadlines

Record-keeping and bookkeeping requirements

Accurate record-keeping is crucial for small business owners to fulfil UK business tax obligations. It helps you maintain a clear financial overview, ensures compliance with tax regulations and simplifies the process of filing tax returns. Good record-keeping also enables you to track deductible expenses, claim applicable tax reliefs and provide evidence in case of an audit.

To meet your tax obligations, you need to keep and organise various financial documents. These may include invoices, receipts, bank statements, payroll records, expense reports and other documents related to your business’s income and expenses. Retaining these records for the required period, usually at least six years, is crucial.

Self-Assessment tax returns

Self-Assessment Tax Returns are how individuals report their income and calculate the tax they owe. As a small business owner, you may need to file a Self-Assessment Tax Return to report your business income, alongside any other personal income you may have. This includes self-employment income, dividends, interest, rental income and capital gains.

Staying aware of important dates and deadlines is crucial to avoid penalties and interest charges. The tax year in the UK runs from April 6th to April 5th of the following year. Here are some key dates to keep in mind:

• April 6th: Start of the tax year
• October 5th: Deadline for registering for Self-Assessment (if you’re newly self-employed)
• January 31st: Deadline for filing online Self-Assessment Tax Returns and paying any tax owed for the previous tax year.

It’s essential to be proactive and prepare your tax return well before the deadline to allow enough time for accurate completion and any necessary adjustments.

When completing your Self-Assessment Tax Return, avoid common mistakes that can lead to errors or penalties. Some common mistakes to watch out for include:

• Mathematical errors in calculations
• Forgetting to include all sources of income
• Failing to claim eligible expenses and tax reliefs
• Misreporting income or expenses
• Not keeping accurate records to support your tax return
• Taking the time to double-check your tax return and seek professional advice if needed can help you avoid costly mistakes and ensure accurate reporting.

Related Reading: When Is the UK Tax Self-assessment Deadline?

Tax deductions and allowances for small businesses

Allowable expenses

Allowable expenses are legitimate business costs that can be deducted from the business’s income to reduce taxable profit. These expenses must be incurred wholly and exclusively for business purposes. Common examples of allowable expenses for small businesses include rent, utilities, office supplies, marketing expenses, professional fees and employee salaries.

Specific examples of allowable expenses can vary depending on the nature of your business. For instance, if you run a retail business, allowable expenses may include inventory costs, packaging materials and shop maintenance. If you’re a freelance writer, allowable expenses might include computer equipment, software subscriptions and professional development courses. Keeping accurate records and retaining supporting documentation for all permissible expenses is essential.

Capital allowances

Capital allowances are deductions that businesses can claim on certain types of capital expenditure, such as purchasing assets used in the business, like machinery, vehicles or computer equipment. Instead of deducting the total cost of the asset in one go, you can claim capital allowances over a period of time. This helps to reduce your taxable profit and provides tax relief for investments in business assets.

Not all business assets qualify for capital allowances. Eligibility depends on the type of asset and the specific capital allowance scheme. Some common assets that may be eligible for capital allowances include machinery, equipment, vehicles, fixtures and fittings and certain types of renovation or improvement costs for commercial properties.

Research and development (R&D) tax relief

The Research and Development (R&D) tax relief scheme is designed to incentivise innovation and technological advancement. It offers tax relief to companies that undertake qualifying R&D activities. This scheme applies to small businesses engaged in innovative projects that seek to advance science or technology, including new product development, process improvement or finding solutions to technical challenges.

To qualify for R&D tax relief, your business must meet specific criteria set by HMRC. The requirements include undertaking activities that aim to achieve scientific or technological advancements, facing technical uncertainties and employing a systematic approach to resolve those uncertainties. Small businesses can claim either the SME R&D relief, which provides enhanced deductions for R&D expenditure, or the Research and Development Expenditure Credit (RDEC) scheme, depending on their size and circumstances.

Claiming R&D tax relief can provide significant benefits for small businesses. It helps reduce innovation costs, encourages research and development investment and can provide a valuable cash flow boost. Depending on the scheme and the specific circumstances, you may be able to claim enhanced deductions or receive a tax credit.

Seeking professional advice about UK business tax

At Mint Formations, we specialise in helping small business owners navigate the complexities of UK business tax. Our dedicated services are designed to provide comprehensive support and guidance throughout the tax journey. 

We offer a comprehensive and hassle-free all-inclusive core accountancy service specifically tailored for limited companies in the UK. We believe a core accountancy service goes beyond mere paperwork and filing obligations. When you choose our service, you gain access to ongoing support and the opportunity to seek professional tax advice whenever you need it.

As part of our service, we will assign a dedicated senior accountant as your main point of contact. This expert will always be available to answer your questions and address any concerns.

Our core accountancy service includes the standard filing of all company accounts and tax returns. However, we go above and beyond by providing additional services at no extra cost, ensuring you receive excellent value for your money. We are committed to supporting you comprehensively throughout your business journey.

Included in our core accountancy service package:

• Company year-end accounts (including Companies House filing)
• Company corporation tax return (to HMRC)
• Dealing with HMRC and becoming your authorised agent
• Company annual confirmation statement filing (with Companies House)
• Company secretarial services — e.g. filing changes to company officers, address or structure
• Registering director(s) and shareholder(s) with HMRC for self-assessment
• Filing self-assessment tax returns with HMRC for director(s) and shareholder(s)
• VAT registration
• Ad-hoc ongoing advice
• Legal tax planning discussions
• Management accounts
• Payroll (including annual payroll for directors)

Optional extras:

• Filing quarterly VAT returns
• Bookkeeping and management accounts preparation

Explore our legal and business packages today, and let us help you with your UK business tax and accounting. If you have any questions, feel free to contact us. We’re always happy to help.

The post Navigating UK business tax: What you need to know as a small business owner appeared first on Mint Formations Blog.

Creating a small business budget is unlikely to be one of the most exciting experiences of your journey, but it’s absolutely crucial. Just like a business plan, putting together a detailed business budget is vital to running a business. A well-crafted budget can be the difference between a thriving business and a struggling one. Did you know that over 80% of businesses fail due to cash flow problems and lack of planning?

Business budget planning lets you completely grasp your business income and expenses when you start your business. It helps you to prepare for whatever the future holds. In this guide, we’ll walk you through the ins and outs of creating a business budget that works for you. We’ll dive into what a business budget is and go through the steps of creating one. We’ll also include a glossary of key terms.

Ready to create your business budget?

Understanding business budgeting

The task of creating a budget can be pretty daunting. So before diving into the granular budgeting elements, let’s demystify what a business budget actually is. In simple terms, a budget is a financial plan that outlines your business’s projected income and expenses over a certain period.

Think of your budget as your financial roadmap, guiding you to your business goals and keeping you on the right path. A well-planned, comprehensive budget will help you:

• Control your cash flow and save money
• Make informed decisions
• Measure your business’s performance
• Identify potential issues
• Forecast future financial needs and growth opportunities.

While detailed business budgeting may seem more important for larger companies, small businesses should take the time to create a budget for their business finances as early as possible. Not only does an operating budget help you to run your business, but it can help convince financiers to invest in your company.

5 Simple steps to creating your business budget

Now that we’ve covered the basics let’s get down to the specifics. Here’s a step-by-step guide to creating your business budget:

Step 1 — Estimating revenue

The first step in creating a business budget is to estimate your revenue. One of the most crucial elements of this stage is to be realistic with your estimates. If you overestimate your revenue at this stage, it can easily lead to overspending, while underestimating can hinder your growth.

You can estimate your revenue by looking at past sales data if you’re an existing business. Look at all of your sales data from the time your company has existed and use this to put together your estimate.

If you’re a new business or you’re in the process of setting up a new business, this can be a little more tricky, but it’s still achievable. You can base your estimates on your market research (from your business plan) and on industry benchmarks. Once your business has been running for a little while, you can reevaluate your budget to ensure that it’s accurate.

Step 2 — Identifying fixed costs

Next up is fixed costs. Fixed costs are expenses that remain relatively unchanged regardless of your business’s output. They include things like:

• Rent
• Salaries
• Insurance
• Utility bills.

Identifying your fixed costs gives you an idea of the minimum amount you need to keep your business running. Having a clear idea of your fixed costs lets you determine your break-even point — the point where your business’s income equals its expenses.

Step 3 — Understanding variable costs

After fixed costs, we have variable costs or variable expenses. No big surprises here, but variable costs are expenses that change depending on your business’s level of activity and external factors. These costs can include:

• Raw materials
• Shipping costs
• Sales commissions
• Corporation tax and VAT.

In many cases, the more products you sell, the higher your variable expenses. Understanding your variable costs helps you to plan for changes in your output. It also helps you understand how scaling your business might impact your bottom line.

Step 4 — Accounting for one-time and unexpected costs

One-off costs are easy to forget when you’re putting small business budgets together, and they’re tricky to account for. These are costs that don’t occur regularly but can significantly impact your budget. Examples of unexpected expenses could include:

• Purchasing new equipment
• Investing in a software upgrade
• Equipment repairs
• Recruitment.

Budgeting for one-off costs can be challenging as you can never be sure what you’ll need to spend money on. But by factoring them into your budget, you’re less likely to be caught off-guard by these costs. As your business grows, you’ll get a better idea of unexpected business costs and can budget for them better.

Step 5 — Calculating profit

Finally, it’s time to calculate how much profit your business will make. To do this, you must subtract your total expenses (fixed and variable costs and one-time expenses) from your total revenue. Voila! That’s your profit.

Your profit is a key indicator of your company’s financial health. It will help guide your future investment decisions and is the ultimate measure of whether your business is making more than it’s spending. Due to this, you mustn’t over-egg your profits. While it might be tempting, it’s important that you’re honest, as it will affect your business decisions going forward.

Implementing your business budget

Creating your business budget is just the first step. The important work happens when you start to use it to guide your business decisions. It’s vital that you regularly review and update your budget to reflect your current business situation. A budget is a working document and not a one-and-done type deal.

But throughout the process, don’t worry if your actual numbers don’t line up exactly with your budget. A business budget is a plan, not an exact science. Use any deviations from your budget along the way to inform any future budgets you put together and learn from your mistakes.

It’s also important to remember that you don’t need to do it all alone; plenty of help is available. You can easily find a business budget template online and use it as a starting point. Or, if you’re looking for more comprehensive help, you can hire an accountant or financial assistant. Having an accurate business budget is a crucial element for all businesses, so investing both time and money in it is a smart move.

Here are a few tips for successful business budgeting:

• Factor in some slack — Unexpected expenses can pop up. Having a buffer in your budget can help you handle these surprises without stress.
• Be ready to cut costs — If times get tough, know where to trim expenses without hurting your business’s core operations.
• Shop around for services/suppliers — Don’t settle for the first option. You might find better deals or quality elsewhere.
• Keep a contingency fund — It’s always a good idea to set aside some money for emergencies.

Business budgeting glossary

Budgeting can be a daunting and complex prospect for new business owners. This guide gives a good overview of how to create a small business budget, but along the way, you’ll probably come across terms you don’t recognise or understand. We’ve put together some of the most common budgeting terms to help clarify things:

• Revenue — The total amount of money your business brings in from its activities.
• Expenses — The costs incurred by your business in its operation.
• Profit — The financial gain your business makes after subtracting all expenses from revenue.
• Fixed costs — Costs that do not change with the level of output (e.g., rent, salaries).
• Variable costs — Costs that change based on the output level (e.g., raw materials, shipping fees).
• Cash flow — The net amount of cash moving in and out of your business.
• Master budget — A comprehensive financial planning document that includes all of the smaller budgets within your business.
• Operating budget — A detailed projection of all estimated income and expenses based on forecasted sales revenue during a given period (usually a year).
• Capital budget — A budget that covers investments in long-term assets, like machinery or real estate.
• Contingency fund — A reserve of money set aside to cover unexpected costs.

Set your business up for success with expert help

Budgeting is just one element of setting up and running a business. If you’re in the process of starting your own business, it’s important to remember that you’re not on your own, and there’s plenty of help and advice out there.

At Mint Formations, we specialise in helping businesses get off to the right start. We do this by offering a range of services that help you every step of the way, including:

• Registering your limited company
• VAT registration
• PAYE registration
• Virtual office addresses
• Setting up a business bank account
• Accountancy services.

If you’re looking for any assistance setting up and running your company, we’re here to help. Our friendly team can offer advice for your entrepreneurial journey, and our blog and knowledge base is packed with tips and tricks.

Register your limited company with Mint Formations today and start your business the right way. If you have any questions, please get in touch with our team, and we’ll do everything we can to help. 

The post Building a business budget that works for you: A guide for UK-Based entrepreneurs appeared first on Mint Formations Blog.

Related: How to File Company Accounts: Everything You Need to Know

Why is company accounting important?

At the most basic level, accounting is the recording of the financial transactions of a business. It is also referred to as bookkeeping. It’s a language businesses use to analyse financial statements and the status of an organisation to fulfil compliance requirements of the law. 

Businesses need to provide an accurate company accounting analysis because it is your legal responsibility as a Company Director to report all financial activity within your business. Different taxation laws apply to different types of businesses, so it’s also important to know which type of accounts you need to keep records of to be compliant with the laws of your country. 

While you don’t need to become an accounting expert overnight, having a greater understanding of accounting terminology and practices will help you track your income and be a better business owner. You’ll be more equipped to make financial decisions for your business and provide investors with quantitative information about the overall success of your company. 

Basic accounting terms

As mentioned above, accounting is its own business language. Therefore, you’ll need to understand the basic terms of company accounting if you’re just starting out. Accounting practices happen within the Fiscal Year, which can line up with the calendar year, or not, depending on when the company first started its business. 

Debits and credits

Debits refer to a company’s assets — anything tangible or intangible that the company owns — and indicate where money in a business comes from. Credits are a company’s liabilities — expenses and loans or taxes owed — indicating where the money goes. Debits and credits must always be equal when recording the financial transactions of a business. For example, if you purchase supplies for your product for £25,000, you would post that as a debit because you own those supplies. You would then credit your cash account for £25,000 because that money was deducted from your account, balancing out the transactions. 

Expenses, profit and revenue

Expenses are often referred to as “the cost of doing business”, meaning the money you spend to try and generate revenue. These can include rent, utilities, salaries, raw materials and any other operating expenses necessary to fulfil your business needs. Revenue is everything you make on your products and services before expenses are paid in full. Your company’s net profit is the total you earn after all expenses have been deducted from your revenue. 

Company accounting process — Where do I begin?

To begin financial reporting and accounting for your business, there are some steps you need to take to ensure you’re on the path to success. 

Open a business bank account

You want to make sure your business transactions and expenses are separate from your personal accounts. This makes it easier to keep records of what you spend and earn specifically for your business and makes the bookkeeping process much smoother. We recommend setting up both checking and savings company accounts and setting aside sufficient funds for unexpected expenses and taxes. If you’re not a resident of the UK, you can still set up a UK business bank account. 

Itemise all expenses

After your bank account is registered under your business name, you need to keep records of everything by department. Save every receipt or transaction you make related to marketing expenses (including outsourcing web development or social media), business travel (including vehicle expenses like petrol and mileage), home office expenses (like wifi and phone bills), and meals and entertainment. These are all things that can be deducted from your company’s taxes. 

Understand tax obligations for your type of business

This can be difficult, especially if you are setting up an account in a foreign country. Tax laws and regulations vary depending on the country in which your business is registered, and you need to stay up to date with all of the accounting procedures within that country. 

Begin bookkeeping

Set aside some time weekly or monthly to ensure all of your records are organised and in one place. It’s much more manageable to dedicate time to this regularly, even if it seems tedious. If anything is missing or you need to get another record or receipt, you don’t have to chase it down at the end of the year when you’re filing your taxes (and it could prove to be much more difficult down the road). Get into the habit of a regular bookkeeping practice to keep track of your expenses and your business’s overall performance. 

Next steps to file your company accounts

Now that you have basic company accounting knowledge, you’re ready to start bookkeeping for your business. Accounting is a necessary skill as a business owner, and although it may seem tedious, it will allow you to keep an eye on your business’s financial success and help inform future decisions. 

All of this information can be overwhelming, especially given the legal implications if something isn’t correctly filed or reported. If you have any questions about tax procedures or company accounting, our expert accountants at Mint Formations offer comprehensive accountancy services. We are dedicated to your success and will help you in any capacity you need, from answering questions to full accounting services.  

Book a free consultation and let our experts at Mint Formations manage your company accounting needs and guide you through the process: 020 7112 8684

The post Company accounting 101: A quick guide to business finances appeared first on Mint Formations Blog.

Amongst a myriad of perplexing terms, you’ll find one that sounds very familiar: VAT. 

VAT is not a financial term exclusive to business owners. You’ll hear about VAT all the time when purchasing goods and services as a private individual or a business. But what is it, and how does VAT work when you’re the one charging it for your goods and services?

At Mint Formations, we understand that handling VAT can be daunting for business owners — especially if you’ve never done it before. If you’re considering registering for VAT, this guide is for you. It covers everything you need to know about VAT, so you can be confident registering and filing your returns.  

Jump to what you want to know:

• What is VAT?
• When should your business start charging VAT?
• How does VAT work?
• How do you charge VAT?
• How much VAT should you charge?
• How does a VAT return work?
• What are the benefits of being a VAT-registered business?
• How do you register for VAT in the UK?

What Is Value Added Tax (VAT)?[ps2id id=’wat-vat’ target=”/]

VAT stands for Value Added Tax and is a general tax placed on almost all goods and services sold. The simple principle behind VAT is consumers pay a tax on the products they buy based on the product’s value. VAT rates are percentage based, which means the greater the price, the more the consumer pays.

VAT tax is what is known as a consumption tax, as the bill is footed by the customer — not the business. The idea is that the business adds VAT onto their fees and prices as an additional cost and then collects this taxation on behalf of the government.

VAT Threshold: When Your Business Should Start Charging VAT

VAT is required after your business reaches a certain tax threshold. Currently (as of 2020), this VAT threshold is £90,000. Any takings on goods and services after gross income exceeds £90,000 must include VAT. Earnings made before the limit do not need to include VAT.

For example, if your business earns £95,000 over a year, when you first register for VAT, only £5000 is taxable turnover for VAT. The rest is exempt from VAT. If you earn £89,999 or less, you do not need to pay VAT.

Small businesses do not immediately have to charge customers VAT because it invariably causes your prices to increase or your income to decrease — depending on how you opt to manage VAT charges to customers. 

To remain competitive, some businesses may need to lower costs so they do not deter customers. As a result, a threshold allows low-income small businesses to stabilise their finances and remain active in the market by charging consumers lower prices.

Once you are VAT registered, you must stay VAT registered until you start earning less than £90,000 a year. This means that, unlike with tax allowances, the availability of the £90,000 allowance does not reset at the beginning of the next tax year. If you are VAT registered, you must pay VAT on goods and services.

Registering for VAT

After you hit the VAT tax threshold, you must start charging VAT.

The first step is to register for VAT with HMRC. This allows you to send a VAT return, similar to a self-assessment tax return. If you are a sole trader, you can register yourself for VAT. If you own a limited company, the small business must be VAT registered.

If you submit a tax return for your business over the £90,000 threshold but haven’t registered for or paid any value-added tax, you will face investigations and penalties. VAT is not optional.

Once you are registered for VAT and are earning above the threshold, you can charge VAT to customers on goods and services.

How to Charge VAT

It’s incredibly easy to charge VAT. All you have to do is add VAT to the basic cost of the goods and services you offer. The way you manage this depends entirely on how you charge customers.

If you work in retail, for example, and you put a price tag on your goods, then you include the VAT in the price of the product. When the customer buys the product, they pay for the cost of their goods — and the VAT. 

If your business is a service provider, you might opt to do this differently. When you supply an invoice to customers, you can include the standard cost of services and a separate VAT fee. When the customer pays the total price, you then set aside the VAT amount to pay as part of your VAT return. 

Remember, VAT money is not yours, and you must not consider VAT payments as additional income.

VAT Rates Explained

For most small businesses, you will need to charge the standard VAT rate. This is 20% of the product’s cost. However, the standard rate isn’t the only fee available on goods and services. There are two other kinds of VAT:

• Reduced Rate — Reduced rate VAT is a VAT of 5% on goods and services. This rate applies to items considered a luxury necessity. These include car seats for children, energy-saving activities, many fees for charities and mobility aids for the elderly.
• Zero Rate VAT — Zero rates are products and services for which VAT is charged at 0%. You charge no VAT on sales for these items. These VAT-exempt products and services are considered essentials and include many types of food, children’s clothing, bookings, medical supplies and equipment.

You must record both of these rates on your VAT return — even zero-rate products. The only goods and services you do not need to record for VAT purposes are those exempt from VAT. These include medical services, finance and credit, and fundraisers operated by charities.

To see a full list of what items are reduced rate, zero rate and exempt from VAT, you can visit the government website.

Filing Your VAT Return

A VAT return is an accounting practice all VAT registered companies or individuals must complete. Unlike self-assessment tax returns, a VAT return is not an annual statement but instead submitted every three months. Like a self-assessment tax return, it is a statement of income submitted to HMRC for tax payments and record keeping.

When you register for VAT, you also register for VAT returns. You can submit your VAT return online.

A VAT return shows all sales of goods and services you’ve made that include VAT payments. Your return will display the amount of VAT collected and what you owe the government in tax. 

However, it isn’t that simple. As a business, you will have made your own purchases and paid VAT on them. Because you’ve made VAT payments already, it is possible to reduce the fees you owe for VAT and even reclaim revenue.

You can only reclaim VAT on business-related expenses. This is the same as with business expenses on a self-assessment tax return. To keep things simple, if you claim it on your annual returns, you can claim the VAT back on your VAT returns. 

If you’ve paid more in VAT through expenses than you’ve earned, you’ll get a VAT refund. If you’ve paid less than what you’ve earned but still paid some, your VAT bill reduces. If you’ve paid no VAT on expenses over the three months covered by your VAT return, you’ll pay all the VAT you’ve charged.

While it’s possible to complete your own VAT returns, many companies use accountancy services. These services give you peace of mind as you’ll know that your returns will be completed correctly. 

The Benefits of Being a VAT Registered Business

VAT is a contentious issue for businesses, and there are pros and cons to being VAT registered. However, there are also some definite benefits to being a VAT-registered business. Here are four of the main benefits:

• You can claim back VAT on goods and services purchased for your business. This can be a significant amount of money, and it can help to boost your cash flow.
• You can register for the Flat Rate Scheme, which can simplify your VAT returns and save you money.
• You will be seen as a more credible business by both customers and suppliers. This can help you to win more business.
• You will better understand your costs, as you will need to track all VAT payments and receipts. This can help you to manage your finances more effectively.

Many business owners choose to become VAT-registered businesses voluntarily, even if they do not meet the VAT threshold due to these benefits.

How to Register for VAT in the UK in 5 Steps

If you’re doing business in the UK, you may need to register for VAT (Value Added Tax). Here’s a step-by-step guide on how to do it:

Step 1: Check If You Need to Register

Check if you need to register for VAT. You must register for VAT if your taxable turnover is more than £90,000 per year. If you’re unsure if your turnover is above this threshold, you can use the HMRC online tool to check.

Step 2: Create an Account

Once you’ve determined that you need to register for VAT, you can do so online via the GOV.UK website. You’ll need to create an account and have your Company Registration Number (CRN) ready.

Step 3: Receive your VAT Registration Number

After you’ve registered, you’ll be given a VAT registration number. This number must be used on all invoices that include VAT.

Step 4: Choose Your VAT Return Frequency

You’ll need to decide how often you want to file your VAT return. The options are quarterly or annually. The frequency will depend on the size and nature of your business. Most businesses choose to file a quarterly VAT return.

Step 5: File Your VAT Return

When it comes time to file your VAT return, you can do so online via the GOV.UK website or using commercial software such as Xero or QuickBooks.

Keep in mind that once you register for VAT, you must charge VAT on all eligible goods and services you provide. You can then claim back the VAT you’ve paid on expenses related to your business. Registering for VAT can be a hassle, but it’s worth it if it means that your business is operating legally in the UK!

Register for VAT the Easy Way with Mint Formations

Do you need to register for VAT? If so, Mint Formations can help. We offer a VAT registration service that is fast, easy and hassle-free. We will take care of all the paperwork and requirements, so you can focus on running your business.

Registering for VAT can be a complex and time-consuming process, but with our service, it is quick and easy. We will guide you through every step of the process, ensuring everything is done correctly.

At Mint Formations, we can help you get your company established and VAT registered. Get in touch with our team today for support and guidance.

The post How does VAT work? A simple explanation for entrepreneurs appeared first on Mint Formations Blog.

Every tax year, businesses, sole traders and owners of rental properties have to file a tax return on any untaxed income. Whether you complete your tax return online or fill out a paper tax return, the self-assessment deadlines are different. Missing your tax return deadline means you could be subject to hefty penalties from HMRC.

We’ve put together this guide to give you a hand with your self-assessment tax return. It details the self-assessment deadline, what happens if you miss it and other important dates in the UK tax year. We’ve also put together top tips for keeping on top of your taxes and making your tax return simple.

What is a Self-Assessment Tax Return?

If you’re newly self-employed, then it’s pretty likely that you’ve never had to think about income tax all that much. Most people’s experience with tax doesn’t go beyond seeing Pay as You Earn (PAYE) deductions on a payslip. But when you go self-employed, you become responsible for paying tax on your taxable income. This tax liability is a serious responsibility, and getting to know your responsibility is crucial to avoid fines from HMRC.

You must send a tax return to HM Revenue and Customs if you’ve earned more than £1000 as a sole trader in the last tax year or if you are part of a business partnership. The tax year runs from the 6th of April to the 5th of April every year. Your tax return covers your income from the previous tax year. So, if you are completing a tax return after the 5th of April 2021, you will be submitting a tax return on the income you earned in the 2020-2021 tax year.

Beyond the business world, you must also complete a tax return if you earn taxable incomes from the following sources:

• Rental properties
• Commission and tips
• Savings
• Investments
• Dividends.

The purpose of your self-assessment tax return is to calculate the amount of tax you need to pay on your income. Completing a tax return doesn’t necessarily mean that you’ll have to pay any tax on your income, but you still need to submit one if you earn over £1000.

When the time comes to complete your tax return, it can look pretty complex. It’s important not to get overwhelmed. While you need to provide a lot of information, many options won’t apply to you, so you can skip past them (after reading them carefully). Generally, you’ll need to include the following personal information and details:

• Unique Taxpayer Reference (UTR)
• National Insurance (NI) number
• Details on untaxed income
• Expenses
• Charity and pension contributions
• P60 to show any income you’ve already paid tax for.

It’s essential to take your time filling out your tax return as you will want to avoid any mistakes. Starting early is a good idea as although you have until the self-assessment deadline to correct any errors, they can be costly if you miss them.

When Is the Self-Assessment Deadline?

There are three self-assessment deadlines to be aware of. The deadline to pay tax is always the 31st of January every year. But the date for submitting your tax return depends on whether you complete an online tax return or a paper tax return.

If you’re submitting on paper, the deadline for submitting your tax return is midnight on the 31st of October. If you’re completing your tax return online, the deadline is on the 31st of January — the same date as payment is due. While the deadline for online returns is the 31st of January, make sure that you register for self-assessment well before that date, as the registration can take some time to process, and you want to avoid missing the tax return deadline.

There are certain circumstances where your tax return deadline may change. If this happens, HMRC will let you know that you must submit an online tax return after 31st of October. If that happens, you’ll have until the 31st of January to pay. On rare occasions, HMRC will extend the payment deadline too. In January 2021, HMRC waived fines for late filing due to Coronavirus and extended the deadline.

What Happens if You Miss the Self-Assessment Deadline?

If you can, you should avoid missing the self-assessment at all costs. If you fail to submit your return on time, HMRC will issue you with penalties that increase with the length of time you fail to submit and pay tax. The penalties are as follows:

1. If you miss the deadline by a single day, you can be fined £100.
2. After three months, you can be charged up to £1000 for missing the deadline.
3. If you pay your tax six to 12 months after the deadline, you can be fined £300 on top of the previous fines. HMRC will sometimes choose to fine you 5% of your entire tax bill, which can be more expensive.
4. After 12 months of missing your tax payments, HMRC can issue another £300 fine or 5% of your tax bill. Occasionally, HMRC will fine you 100% off your original tax bill, meaning you will pay double tax.

As you can see, it’s well worth ensuring that you submit your tax return and pay any tax you owe on time. But sometimes, events out of your control mean that you miss the deadline. If this happens, there is an appeals process for a late filing penalty where HMRC will accept a reasonable excuse. Reasonable excuses that HMRC accepts include:

• Family grievance
• Hospitalisation
• You have a serious illness
• Service issues from HMRC
• Unexpected postal delays
• Tech and software failures
• Theft, fire or flooding.

While HMRC accepts reasonable excuses, you must still file and pay your tax when the issue is resolved. If you have a reasonable excuse, you need to contact HMRC as soon as possible.

Key Dates in the UK Tax Year

As you can see, there is quite a bit to keep on top of to pay your tax on time and avoid penalties. Through the tax year, there are several dates that you should keep in mind:

• April 6th — The first day of the new tax year.
• July 31st — If you’re self-employed, you will make your second payment for the previous year’s tax bill. This is known as payment on account.
• October 31st — Submission deadline for paper tax returns
• January 31st —- Submission deadline for online tax returns
• April 5th — End of the tax year.

Generally, these dates remain the same each year, but it is always worth checking that they haven’t changed.

Top Tips for Paying Tax Correctly

Completing your self-assessment and paying tax aren’t exactly highlights of self-employment, but they’re unavoidable. While it might be tempting to put it off until the last moment, there are several things you can do throughout the year to make paying tax far easier.

File Your Tax Return Online

Filing your tax return online is much easier than filing a paper return. It’s easy to register to file online and allows you to quickly upload all of the information HMRC needs. There is also an option to save your progress and return to it later. While paper returns are still an option, most modern businesses submit their return online.

Keep Track of Income and Expenses

As part of your tax return, you will need to supply HMRC with details of your self-employed income. You can submit this as a single figure or as detailed transactions. Whichever you choose, you’ll need to have accurate records of both your income and expenses. One of the best ways to do this is to create a spreadsheet. Most businesses will keep records of:

• Invoices
• Quotes and estimates
• Purchase recipes and expense invoices
• VAT.

You’ll undoubtedly need to keep other records for your business, and it’s essential to get them organised to avoid making mistakes on your tax return.

Hire an Accountant

Dealing with tax is an unavoidable part of self-employment, and you are solely responsible for ensuring that you pay it correctly. But that doesn’t mean you can’t get help from an accountant. Hiring an accountant means you can rest easy knowing a professional is taking care of your tax. Alongside peace of mind, an accountant can also provide you with opportunities to save money through tax credits and tax relief.

Need to register as self-employed? Mint Formations can help you with your sole trader registration and ensure a successful registration with HMRC. Our accountancy service can also help you submit an error-free self-assessment tax return.

The post When is the UK tax self-assessment deadline? appeared first on Mint Formations Blog.

And that’s all before you start your company formation with the appropriate authorities. You’ll probably come across a lot of acronyms throughout the process, but one of the most important ones is your company UTR number. 

Fortunately, here at Mint Formations, it’s our business to help people like you get your businesses set up, so we know all about UTR numbers. That’s why we’ve put together this guide to help you understand company UTR numbers, what they are, why you need one and how you get one. 

What Is a Company UTR Number? 

Let’s cover the basics first, UTR stands for Unique Taxpayer Reference, and it’s a unique 10-digit number that HM Revenue and Customs (HMRC) issue to anyone who completes a tax self-assessment. 

There are two types of UTR number available; personal and company. HMRC issues personal UTRs to anybody registered for self-assessment, whereas a company UTR number is a separately assigned number when your company is incorporated.

HMRC use these numbers to identify companies for all tax-related purposes. It’s essential to make sure you keep your UTR number handy as you’ll need it when you are: 

• Adjusting your corporation tax accounting period
• Registering for VAT and PAYE
• Completing VAT and tax returns
• Informing HMRC that your business is now dormant
• Paying your employees (if you have any)
• Contacting HMRC for any business-related issues.

While it’s a requirement to have a UTR number, it also makes tracking your historical data and submitting new financial information incredibly easy. 

Who Needs a Company UTR Number? 

Anyone who is self-employed or receives income from other sources like a rental property will need to register for self-assessment and be issued a UTR number. This includes: 

• Sole traders
• Limited companies
• Partnerships 

But if you form a limited company, you’ll need a company UTR number. Companies House will inform HMRC, and they will issue your company a UTR number by sending a letter to your registered address. This letter will contain your number and guidance on your tax responsibilities. 

How to Apply For a Company UTR Number 

You’ll be issued with a UTR number when you register for self-assessment tax or form a limited company. Companies House will inform HMRC that your business has been incorporated and, within 14 days, send you a letter containing your company UTR to your registered office address.

Once you’ve started trading, you’ll need your UTR number to register as ‘active’. You’ll need to register as ‘active’ within three months of any business activity for Corporation Tax. 

You can register as ‘active’ online or by post. If you are applying online, you’ll need your Government Gateway ID and password and your company UTR number. If you’re planning on applying by post, your company director or secretary must sign the application letter. 

You’ll have to supply the following information to HMRC when you register your company as active: 

• Company name
• Registration number
• The date you started trading
• Your business’s primary address
• Principal activities of your business
• Your business’s accounting reference date

You’ll also need to supply details of all of your company directors such as: 

• Names
• Address
• National Insurance numbers.

What If I lose my Company UTR Number?

Regardless of how careful you are, everybody misplaces things from time to time and losing track of a UTR number isn’t uncommon. So if you lose your number, don’t panic. Because this happens quite frequently for businesses, HMRC has made it as easy as possible to rediscover your UTR number.

The best place to look first is through any office HMRC correspondence like tax and payment reminders. It doesn’t matter how old they are, as your UTR number doesn’t change. You might also have your letter of confirmation among your paperwork that will have your UTR on it. 

But if you can’t find any letters, you can also use the Government Gateway. The online portal is where you file your tax returns and is an excellent place to find your UTR number. Just look under your account summary in the self-assessment section. 

If you can’t find your UTR in either paperwork or online, then you can contact HMRC, and they will send it out to you. You’ll need to make a request online if you are a limited company, and HMRC will send your number to your registered business address to safeguard against fraud. 

Other Company Numbers to Be Aware of

When you’re setting up a business, you’ll come across various information and be assigned a variety of different numbers for several purposes. You mustn’t confuse your UTR number with any of the other numbers you’re issued.

Is a Company Number the Same As a UTR number? 

Your company number is usually your Company Registration Number issued when you register with Companies House and is used to identify your business. These numbers typically contain eight numbers or two letters, followed by six digits. 

What’s the Difference between UTR and VAT number? 

These two are understandably easy to confuse as they are both tax-related. HMRC will issue a VAT number to companies when they register for Value Added Tax. These numbers will have the prefix “GB” and nine digits.

Is a CIS Number the Same As a UTR Number?

If you register as part of the Construction Industry Scheme (CIS), your CIS number allows contractors to deduct tax from your earnings in a similar way to Pay As You Earn (PAYE). To register for CIS, you’ll need a UTR as you’ll still need to submit a self-assessment. It’s important not to mix your CIS number up with your SIC code which identifies what your business does. 

Not Got a Company UTR Number? 

If you haven’t got a company UTR number, then you’ll need to get one as soon as you can. A UTR number is a legal requirement if you are self-employed or running a business, as it is essential for you to file your tax returns.  If you earn income outside of traditional employment contracts and don’t have a UTR number, you are liable for prosecution. 

If you’re a bit overwhelmed by the requirements for setting up your business with all of the acronyms and paperwork, it’s worth considering a company formations agency, like Mint Formations. We’ll take care of all of the nitty-gritty details of getting your business up and running, including obtaining your UTR number and allow you to focus on making your business a success. 

Need a hand getting your company UTR number set up? Our formation specialists can help you register your company and secure your UTR number. If you’ve got your UTR number and need help handling your current finances, have a look at our help and advice services.

The post A Company’s Unique Taxpayer Reference (UTR): What It Is and How to Get One appeared first on Mint Formations Blog.

UTR stands for Unique Tax Reference, a 10 digit code assigned to you and you alone. Your UTR exists entirely for tax management. It cannot be used as any other form of identification.

Do You Need a UTR Number?

Yes, you do need a UTR number. Every single piece of correspondence you receive from HMRC, and every self-assessment tax return you file, is assigned to your UTR number.

All this data is stored on the HMRC database, which means it’s incredibly easy for both HMRC and yourself to review historical information and submit new data.

Without a UTR number, it would be easy for things to get mismatched and lost. UTR numbers ensure the stability of financial information with HMRC, in a country with around 5 million working people, and a further 4 million small businesses.

With more than 9 million unique entities paying self-assessment tax every year, the Government has a lot to manage. HMRC needs a way to separate and monitor them all, and you need a way of making sure you can keep track of your tax return responsibilities and records.

How Do I Get a UTR Number?

Acquiring your UTR number is very simple. All you have to do is register as a self-employed worker. Once registered, you are supplied with documents containing your UTR number. If you want to get your UTR number without registering as self-employed, you need to contact HMRC directly to get your reference number. You can either do this by phone or post. Keep in mind this requires personal information to be shared, just as it does when you register for HMRC as a self-employed worker.

How Do I Get a UTR Number for a Limited Company?

Just as an individual can owe tax, so can a limited company. That tax comes in the form of National Insurance payments, Corporation Tax, VAT, and other tax variables. To ensure the right payments are made to HMRC, a business needs a unique taxpayer number.

When you set up a limited company, you’ll need to register with Companies House. This process involves the provision of several details to enable formation. After this process is completed, you will receive all the relevant information pertaining to your company’s registration, and this includes its UTR number.

How Long Does It Take to Get a UTR Number from HMRC?

Whether you register for self-assessment tax or as a limited company, your UTR number is provided to you following the completion of the registration process. Access to your UTR number will be immediate once your application is processed.

If you are attempting to obtain your UTR number without registering for self-assessment tax, the process can take longer as there is no automation involved. It will likely require several points of contact with HMRC.

How Do I Find My UTR Number?

If you’ve already registered for self-assessment tax, you’ll have a UTR number as it’s an essential part of tax returns. To find a lost UTR number, you can check in two places:

• Online — Your UTR can be found on the HMRC web portal. All you have to do is sign in to access it.
• Paper — Most documents relating to self-assessment tax will contain your UTR number. Locate the document and you’ll locate your UTR number.

Can I Change My UTR Number?

Once a UTR number is assigned, it cannot be changed — and you don’t need to change it. A UTR number is similar to a National Insurance number; it is your unique identifier. Even if you de-register for self-employment and then register again later, it will remain the same.

There is only one exception to this rule. If you file for private bankruptcy, you will be assigned a new UTR number.

Looking for advice on getting a UTR number because you are interested in starting your own business and being your own boss? Work with Mint Formations today to register your company name and we’ll help you get started on your self-employment journey!

The post Explained: How Do I Get a UTR Number? appeared first on Mint Formations Blog.

Unique Tax Reference sometimes referred as Corporation Tax Reference is a 10-digit number either for you or for your company. Once your company is formed, Companies house notifies HMRC (Her Majesty’s Revenue and Customs) about your newly registered company. HMRC, in turn will register all the information about your company in their database and release a letter with your UTR to your registered office address. It will be sent within 14 working days of your company being incorporated (registered) with Companies House.

How to get a UTR?

HMRC automatically issues a UTR number in the following situations:

• If you have registered a new limited company
• If you are registered as self-employed sole trader
• If you are registered as a partnership company
• If you have notified HMRC of a trust liable to income tax

Where can you find your UTR?

UTR will be printed on HMRC letter’s as ‘Tax Reference Number’ or ‘Unique Tax Reference Number’ or ‘Official use’. You can find the UTR on most of the statutory communication from HMRC including

• HMRC’s welcome letter
• Notice to file a tax return
• Payment reminders from HMRC
• Any statement of accounts from HMRC

If you have availed for online services, you can simply login to HMRC online portal and find your UTR number there.

What happens if you’ve lost your UTR number?

If you have lost your UTR number or the communication from HMRC, the best option for you is to contact HMRC directly. You can call self-assessment helpline directly to request your UTR.

To get your limited company’s Corporation Tax UTR number, you can simply apply online. HMRC will send it via post to your company’s address that is registered with Companies House.

The post How to get your companies unique tax reference appeared first on Mint Formations Blog.