Tax is the blood of the state. Without it, a government is considered impotent and unable to provide services for its people. If you are an individual operating a small business on your own, you must file separate tax for the business and a personal tax for yourself. This is entirely different if one is employed. This is by the UK IR35 legislation that was introduced in 1999 as a fight against the high rate of tax avoidance in the United Kingdom.
Looking for a better understanding of the new IR35 tax regulations? Find all the information you need on our IR35 Calculator website.
This legislation applies to individuals who provide services or contract with the limited company but does not work as employed status. If one is operating a legitimate small business, they are not included in the IR35 legislation.
It is important that an individual knows about the tax applicable to him otherwise if he was caught avoiding his obligation he will face hefty fines and penalties. However, determining if one is caught by the IR35 can be complex that sometimes one needs the assistance of the account of experts in taxation otherwise if you choose to do it by yourself the UK tax calculator can help you.
The Corporate Tax
The moment you set up a small business, you need to register it for the corporate tax. This means that the owner had now the obligation to pay tax to the profit he gained from the business. For a small enterprise that gains up to £300 thousand, the UK government set twenty per cent to be paid for the corporate tax. If the companies earn profit more than that, good news because of the last 2015, 2016, the rate had already become 20 per cent of the profit gain. Depending on the size of the company income, the UK tax calculator is customizing to calculate the amount of the liability tax you are obligated to pay.
VAT or Value Added Tax
The Value Added Tax applied when your business was able to make a turnover of £82 thousand or more within one year. Initially, you are already applying the 20 per cent standard rate in tax as for the corporate tax, and with VAT, you need to add the value added tax that you will collect on behalf of the HMRC. However, there are several taxes scheme that your accountant can work out for you to lessen the burden of payment of taxes.
NI or the National Insurance
If your business operates with the help of employees, then the income tax is subjected to the National Insurance remittance that will be deducted every quarter or every month. If you don’t employ people to help in your business, then you are required to notify the HMRC that there is no recurring tax for that period.
Typically, if one established small business, you need to pay yourself a salary for your personal needs. And the salary or wage you set for yourself will be subject to taxation. If you get dividends from other companies, this too is included in the individual tax of the person. To help you in assessing your tax liability, the UK salary calculator can help in the fast calculation of your salary tax.
In settling the taxes for the limited company, the UK salary calculator or the UK tax calculator is very vital in the process. Make sure you can pay on time by submitting income tax and personal tax you owed.
If you are still unsure of HMRC IR35 legislation applying to you, use our ir35 calculator to find out.