Employment income tax
If you are an employee of a company, your salary income will be taxed under the Pay As You Go (PAYE) scheme and you pay tax every month. It is your employer’s responsibility to deduct the correct amount of income tax and National insurance contribution from your pay. Your employer will also be responsible for preparing relevant forms such as P60, P45, P11D and P14 and submit to HMRC about your employment income.
Sole Proprietors (self employed) and partnerships income tax
If you are in business as a sole trader, you will pay tax on your business profits for the accounting year ending in the tax year by three installments: first payment on 31 January and the next payment on 31 July and with the final payment on 31 January on the subsequent year.
You must file your self assessment return to HMRC before or on 31 January. Any tax overpaid for the accounting year will be refunded by HMRC.
Partner in a partnership will be assessed the same way as sole trader for income tax purposes.
Limited company tax
Your company is obliged to pay corporation tax on its profits nine months after its accounting year end and submit their company tax return 12 months after the accounting year end with HM Revenue and Customs confirming the final amount of tax liability payable or refundable. Your local tax office will assess the corporation tax return and issue a statement confirming your company tax liability.
Interest penalty will be levied on unpaid tax.
Value Added Tax (VAT)
If your company or sole trading business or partnership is registered for VAT. You must be aware of the VAT accounting rules and report your VAT payable or refundable by submitting your VAT returns with HM Revenue and Customs on quarterly or yearly basis.
Seek Professional Help
It is highly recommended to speak with your accountants about each type of British business taxes and how it would affect you and your business. If you are trading internationally, it would be good idea to get advice from international tax specialist.
Concise Accountancy - Helping businesses understand their tax affairs