New company owner asks:
I’ve just set up my company. I’m VAT registered. When do I have to pay tax?
Acumenica answers:
You will have three, maybe four, taxes that you need to pay and they all have differing due dates:
Value Added Tax (VAT)
VAT is generally paid quarterly. When you register for VAT, your VAT quarters are assigned either as ending on 31 March, 30 June, 30 September and 31 December; or 28/9 February, 31 May, 31 August and 30 November; or 31 January, 30 April, 31 July and 31 October. You have one month and seven days to submit and file your VAT return and payment is taken by direct debit on or around the 11th of the month AFTER the due date.
So, if your VAT quarters end on March, June, September and December, payment will be due on 11 May, 11 August, 11 November and 11 February.
If you don’t pay by DD, you need to make payment by the same day as your return is due.
Corporation Tax
Corporation tax is payable nine months and one day after your financial year end. So, if your financial year end is 31 December, payment will be due on 1 October the following year.
PAYE/NIC
PAYE and NIC are paid together and are normally paid monthly. The tax month runs to the 5th of each month and payment of PAYE and NIC is due on the 22nd of the month - just two and a half weeks after the tax month ends. If your monthly PAYE/NIC liability is below £1,500 you can opt to pay this quarterly.
Personal Tax (Income Tax)
You may need to pay income tax on the money you take from the company in salary and dividends. If your personal tax bill is less than £1,000 for the year, payment will normally be due on 31 January following the end of the tax year in question. If your tax bill exceeds £1,000 then you will be expected to make in-year Payments on Account of 50% on 31 January and 31 July.
This can get quite confusing, especially if it’s the first time you had to file and pay personal tax: On 31 January, you’d need to pay 150% of your first year’s tax, and on 31 July another 50%. This is why tax planning and early intervention is important.
The Acumenica team are on hand to help business owners with all tax planning as well as on other matters. To arrange a no-obligation confidential chat, please complete the form on our Contact Us page or call 03330 166559.
