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Tax Guide for Small Business

What fundamental taxes do small businesses pay in the United Kingdom? This tax overview guide is for business owners and anyone running their own company.

The legal structure of a business has some impact on how much tax it will pay. It also determines the amount of control and responsibility afforded to the business owner.

TAXATION: There are a handful of common and key taxes you should be aware of, and understand, if you run a small business.

As a rule, once you have setup in business and start trading you will have some kind of company taxation to pay, such as:

Managing a commercial operation can seem complicated with all the different taxation rules. Many bosses find it difficult to understand which taxes apply to their particular outfit.

This overview will help you determine your liabilities and obligations. Use the guide to ensure you pay the correct levies to HM Revenue and Customs.

Business Taxation Help Guide

Accounting Procedures

Cash Basis

Your small business may be better off using cash basis and simplified expenses accounting practices. You record business income and expenses as cash flows in and out – not when invoiced or received.

Company Tax Returns

Learn how to prepare a Company Tax Return for a limited company or an association. Check the deadlines, penalties for late filing, and how to make ‘amendments’.

Dormant Companies

An ‘inactive’ company has varying statutory obligations for corporate taxation. Review all the procedures of dormant companies and associations for Corporation Tax.

Filing Tax Returns

The accounts and tax returns for private limited companies are annual. They take place after the end of the company’s financial year.

First Accounts

Some accounting basics will help you avoid penalties if you started a limited company. Check how to line up limited company first accounts and Company Tax Return.

Tell HMRC about Changes

It is not uncommon for a company to change its legal structure or its activity. Check how and when to tell HMRC about a change to your business name, address, or other details.

Capital Allowance Relief

Understanding the rules of claiming capital allowances is key for anyone in business. Check how to claim capital allowances on business assets and pay less tax.

Capital Gains Tax

Producing a profit, or realising a gain, on company assets may be liable for Capital Gains Tax for business situations. An example could be selling or disposing of an asset that is part of the business.

Note: HM Revenue and Customs can conduct tax compliance checks on an individual taxpayer or on those who run a business. Find out how the checks get conducted and what you might need to do.

Charities and Taxation

Most ‘recognised’ charities will qualify for some tax exemptions and reliefs. The section explains treatment of charities and taxation by HM Revenue and Customs.

Construction Industry Scheme (CIS)

The Construction Industry Scheme is one of the special tax deduction schemes in the United Kingdom. As a rule, tax gets deducted at source from CIS payments relating to building work.

Corporation Tax

Corporate Taxes

The guide explains when a company or an organisation must pay Corporation Tax. Check the processes for paying company taxation and reporting to HM Revenue and Customs.

Environmental Taxes

There are several different types of environmental taxes and reliefs running in the United Kingdom. Check which schemes focus on off-setting the impact of enterprise on the environment.

Making Gifts to Charity

Donations are ways for limited companies to get tax breaks on Corporation Tax. Check the lawful process of claiming tax relief when your limited company donates to charity.

Note: A different guide explains HMRC First Tier Tribunal rules for making an appeal to the tax tribunal. Find out what happens at First-tier tax tribunal hearings and what to do if you lose the case.

Employees Benefit Expenses (BIK)

All employers should understand how expenses and employee benefits work in UK. They are an indirect means of compensating workers with benefits above and beyond their normal wage.

Expenses for Self-Employed

Allowable Expenses

The section explains allowable expenses for self employed workers. Check out all the business expenses you can claim for if you are self-employed.

Simplified Expenses

Check to see if simplified expenses could save your business money. Try the simplified expenses checker and compare what expenses you may be able to claim.

Machine Games Duty (MGD)

Machine Games Duty Explained

Takings from a game played on a machine for a prize is subject to Machine Games Duty (MGD). Check out what you need to pay it on, how to register, and how to file a return.

Paying Machine Games Duty

HMRC issues penalties for late filing of MGD returns beyond the deadlines. The guide explains how to pay Machine Games Duty in the United Kingdom.

Register for Gambling Tax

Information in the section covers the process of registering for gambling tax. The service explains how to register to pay gambling taxes online in the United Kingdom.

Value Added Tax

VAT Businesses

A business can only charge Value Added Tax if they have VAT registration with HM Revenue and Customs. Find out how businesses and charging VAT works in the United Kingdom.

VAT Returns

How to Submit a VAT Return

As a rule, most companies must submit VAT Returns every quarter to HM Revenue and Customs. Thus, the dates for quarterly VAT Return are the ‘accounting period’ for a business.

Paying a VAT Bill

There are different ways to pay your VAT bill to Her Majesty’s Revenue and Customs in United Kingdom. In fact, most small businesses will pay VAT bill online – but there are other options.


HM Revenue and Customs developed VAT MOSS. It allows UK sellers to pay VAT MOSS bill to HMRC (e.g. instead of registering for VAT in numerous EU countries).

HMRC Business Tax Accounts

Note: The short video [2:59 seconds] presented by HM Revenue and Customs explains how to add up to forty (40) different services to your business tax account.

Business Tax Guide for Owners of Small Businesses in United Kingdom