Baskadia

When running a limited company in the UK, one of the most important obligations is managing your tax responsibilities correctly. Failing to comply with tax rules can lead to penalties, interest charges, and potential damage to your company’s reputation. Understanding what taxes apply, when they are due, and how they should be reported is essential for staying compliant and keeping your business financially healthy.

Corporation Tax

Every limited company must pay Corporation Tax on its taxable profits. Unlike individuals, there is no bill sent automatically — it is your responsibility to calculate the amount due. Key points include:

• Registration: You must register for Corporation Tax with HMRC within three months of starting trading.
  

• Tax Rate: As of April 2025, the main Corporation Tax rate is 25%, with a lower 19% rate for companies with profits below a certain threshold.
  

• Filing: You must file a Company Tax Return (CT600) and pay the tax due within nine months and one day after the end of your accounting period.
  

VAT (Value Added Tax)

If your company’s taxable turnover exceeds the VAT registration threshold (currently £90,000), you must register for VAT. Even if your turnover is below the threshold, voluntary registration can sometimes benefit your business. Once registered, you will need to:

• Charge VAT on sales
  

• Submit VAT returns (usually quarterly)
  

• Pay any VAT due to HMRC
  

PAYE and National Insurance

If your company employs staff — including directors who take a salary — you must operate PAYE (Pay As You Earn) as part of your payroll. This ensures that income tax and National Insurance contributions (NICs) are collected correctly. Employers also pay an additional National Insurance contribution on employee wages.

Need help filing your Confirmation Statement or updating company details? Visit fileconfirmationstatement.io for expert guidance, templates, and reliable support from professionals.

Dividend Tax

Many directors pay themselves through dividends. While dividends are not subject to NICs, they are taxable for the recipient. Your company must keep accurate records of dividend payments and issue dividend vouchers to shareholders.

Record-Keeping Duties

Limited companies must maintain clear financial records to support all tax filings. This includes:

• Income and expenditure records
  

• VAT invoices (if applicable)
  

• Payroll and dividend documentation
  

• Bank statements and receipts
  

Good record-keeping not only ensures compliance but also helps avoid mistakes during audits or HMRC checks.

Other Potential Taxes

Depending on your business activities, you may also need to consider:

• Business rates if you operate from commercial premises
  

• Capital gains tax when selling company assets
  

• Stamp duty if you transfer company shares
  

Final Thoughts

The tax responsibilities of a limited company may seem complex, but with careful planning, reliable systems, and timely submissions, they become manageable. Staying on top of Corporation Tax, VAT, PAYE, and dividend obligations is crucial to protecting your company from penalties.

Alongside these financial duties, don’t forget other statutory requirements such as Confirmation Statement Filing, which ensures Companies House has accurate information about your business. Together, these obligations help maintain your company’s legal standing and credibility.