- Statutory Accounts
Every company has an accounting reference date, more commonly know as acompany financial year end. This is the date that the company’s statutory financial accounts are prepared to. As a general rule company accounts have to be lodged with Companies House within 9 months of the company year end.
By default when a company is registered its year end is 31 December. However for your purposes it is far more sensible to have a company year that aligns with the personal tax year, so we change the year end to 30 March for all of our companies.
Changing the year end means the first year will either be longer or shorter than a calendar year. This can mean you have slightly less time to lodge your accounts, however because we provide you with Live Accounts this will never be a problem. You will have your accounts completed as soon as you submit your final income and expenses.
- Annual Return
Every company must deliver an annual return to Companies House every year. The annual return must be delivered to Companies House within 28 days of the anniversary of incorporation. But don’t worry, we’ll tell you when your annual return is due. We’ll ask you if anything has changed since last year (generally it won’t) and we’ll submit your annual return on time for you.
- Company tax return
Company Income Tax Return. You must tell HMRC that you have set up a new company and will be liable for companies tax within 3 months of being active. This is not something you need to worry about though, we’ll do it for you.
As long as your profits are below £1.5 million you must pay your corporations tax within 9 months of your financial year end. Conversely you have until 12 months after year end to actually lodge your corporations tax return with HMRC. As we will provide you with a Live Tax Return every time you submit income and expenses, you’ll know well in advance what your tax bill will be, and we will make sure it is submitted on time.
When you register for VAT you nominate, or are given a date when the registration begins.
The period to the end of the third month following this date, and every 3 months after that will be your VAT periods.
Your VAT return and payment are due by the end of the month following the end of the VAT period.
- PAYE & National Insurance
PAYE and NI Payments PAYE and NI are paid quarterly, together in one payment, due as follows:
Quarter 1, 6 April to 5 July – payment due 22 July
Quarter 2, 6 July to 5 October – payment due 22 October
Quarter 3, 6 October to 5 January – payment due 22 January
Quarter 4, 6 January to 5 April – payment due 22 April
Of course we will tell you how much to pay and remind you to pay it.
Employer Annual Return All employers are required to file their employer annual return by 19 May. Again this is something we will do for you and nothing for you to worry about.
P60 Each employe (ie you) must be given a P60 by 31 May. We will generate your P60 and post it to you as it is a statutory requirement that your company provide it to you. Of course we’ll probably be doing your personal tax return anyway, so the P60 is really just for your records.
- Personal Requirements
Personal Income Tax Return As we will file your personal tax return online the deadline for filing as well as payment is 31 January of the following year.
One thing that it is important to realise is that unlike ordinary employees the majority of your personal income will be in the form of a dividend. So unlike an employee you are not having tax withheld throughout the year. The dividend does come with a dividend tax credit, which covers all of your dividend tax, up to the basic rate limit. However if your dividend takes you above the basic rate limit you will need to pay an additional top up amount of 22.5% of the amount by which you exceed the basic rate limit.
This could be a significant amount of money, and is something you need to be aware of. Of course your Live Tax Return will keep you fully informed of this, so it won’t come as a surprise. But it doesn’t end there. Because you are paying all of this tax so long after you actually earned the money HMRC require an 2 upfront instalments on next years amount.
The first self assessment tax instalment is due on 31 January, at the same time as your final tax return and final payment for the preceding year. The second instalment is due on 31 July.
The instalments are calculated as 50% of the previous years payment. What this effectively means is that in the first year after you become a contractor you have to pay all of your top up amount as well as 50% of next years. In subsequent years your top up amount will be reduced by the 2 previous instalments, so the actual top up may be quite small, or even a refund, but in the first year it can be quite significant.