UK Business Tax

Once you’re operating in the UK, you must also understand the taxation requirements that you’ll be expected to uphold and pay. The UK business tax system as a whole is relatively simple to familiarise yourself with, but you’ll more than likely want to employ an accountant to work out the finer details and help you understand what reliefs may be available to you. You can find a plethora of information on this subject by visiting 

https://www.gov.uk/browse/business/business-tax

As a business, depending on your size, and financial situation, you’ll be expected to register for and pay some of the following forms of tax:

• Corporation Tax – tax paid on your business’ trading profits. Current rate set at 19% (2020/21).
• Value Added Tax (VAT) – tax paid on the final consumption of goods and services. This is payable on most business-related goods and services in the UK at a standard rate of 20% if turnover is above the threshold (currently £85,000 for the 2020/21 tax year)*. Some businesses may still want to opt in to pay VAT if they fall below this threshold.
• National Insurance – a deduction from earnings that funds various forms of national benefit including the NHS and state pensions.
• Business Rates – Known as ‘National Non-Domestic Rates’, this is payable on all business premises. Reliefs apply. For example, you will not pay business rates on a property with a rateable value of £12,000 or less. This is known as Small Business Rate Relief.
• Capital Gains – on sale of assets where there has been a financial gain.
• Stamp Duty – a tax on transfers of land or interests in land, should a business own property.
• Pay As You Earn (PAYE) deductions – deductions made from employee earnings (including your own) as part of your payroll activity.

Registering for tax

Once you’ve registered your business with Companies House (see section three for more information on this), you’ll be able to register to pay VAT and Corporation Tax. You can even register to pay Corporation Tax and sign up for PAYE as an employer at the same time as registering your business, making the process very simple.

Registering your business will give you a unique 10-digit taxpayer reference (UTR). Using this UTR, you can easily register to pay Corporation Tax, VAT, and set up PAYE for your employees through the portal at www.gov.uk/limited-company-formation/set-up-your-company-for-corporation-tax. 

It’s important to note, many of these tax requirements are time sensitive, and you will be expected to register your business for them in a timely manner. For example, PAYE payroll registration must be completed before your staff’s first UK payday. Again, this can easily be done through the online portal using the details you’ve already obtained.

Acquiring business insurance

As a UK business, you are required to insure your business to protect you against numerous risks. UK law requires that you hold Employer’s Liability insurance as soon as you recruit staff in the UK.

This insurance can be acquired from a large choice of providers, so it’s worth researching your options prior to your arrival to find the right provider at the right cost.

You can find out more about setting up a business in the UK here.