Frequently Asked Questions

Self-Assessment | Limited Companies


My friend says he doesn’t pay any tax. Why do I have to pay so much?

This is probably one of our most commonly asked questions! Honestly, there are a few answers. If they work within the construction industry then they likely suffer tax at source and therefore would be unlikely to have a tax liability at the year end. Or they have a large amount of expenses for their business, which means the profitability of the business isn’t as high. There’s a third option – simply that they aren’t being honest about their situation. It is impossible not to pay taxes somewhere!

I have a rental property but I don’t make any “profit” from it. Do I still have to submit a tax return?

In short, yes. If you have any kind of taxable income, you must make sure that HMRC are aware of it. On your tax return, you will note down the income and the tax allowable expenditure for the property. Then, your tax will be calculated on your total income plus or minus the profit / loss for the property.

I want to pay my tax now so it’s not in my account, but it’s not due yet. Can I do this?

Yes, of course! HMRC will allow you to make payments in advance towards your tax liability. So long as your payments are made with the correct references then HMRC will allocate them against your relevant tax account.

When do I have to pay my self assessment tax?

Self assessment tax must be paid by the 31 January following the tax year end. So if the tax year ends on 05/04/19, for example, then your tax is due for payment by the 31/01/20. If your tax bill totals more than £1,000 then you will have to pay 2 additional payments on account. These amounts will be half of your current tax liability and go towards paying the following year’s tax bill. The first payment on account (POA) is also due by the 31st January, with the second due by the following 31st July.

Limited Companies

Do I need to have a separate business bank account?

Yes, when you set up your company it is always recommended to set up a limited company business bank account too.

Do I have to be VAT registered if I’m a limited company?

Only if your turnover is greater than the VAT registration threshold – but you would need to do this whether you were a limited company or not.

What are the benefits to being a limited company?

There are many benefits to being a limited company. Firstly, you have limited liability, so if something goes horribly wrong within the business and for whatever reason things don’t work out, generally speaking liabilities will belong to the company and not the individual. Secondly, you can opt to receive dividends, which are taxed at a lower % than PAYE income or sole trader income.

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