Limited Company Tax Returns

When you set up a limited company you’ll have dates to submit annual accounts to Companies House and a company tax return to HMRC. The period covered by your tax return can’t be longer than 12 months so if you have been trading for longer than that, you may have to file two tax returns to cover the period of your first accounts. If you do, you’ll also have two payment deadlines. In the following years, you will usually only file one tax return.

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Limited Company Tax Returns

What are the pros and cons of a limited company?

A lot of self-employed people choose to set up Limited Companies. They limit the amount of money you stand to lose if it all goes wrong, and can lower your personal tax bill. There's also a certain prestige that goes along with setting up this way. It's a sign that you're taking your business seriously, which can help when you need to impress lenders or customers.

On the other hand, you're giving up some privacy, and adding a few set-up costs. You're also bulking up your bookkeeping workload. For example, since your company's money isn't strictly "yours", you have to make separate tax returns for it from your own.

Limited Company Tax Returns

I'm a Limited Company director. What records do I need to keep?

There's a lot of paperwork involved in being a company director, or even just an employee. You should obviously keep all your P45, P60 and P11D documents, but that's not all. Taxed award schemes, redundancy payments and a whole range of benefits all come with records to hold onto. You should also remember to keep track of any essential expenses you've had. You might be able to use them to bring down the tax you owe.

HMRC will expect you to tell them about any benefits you've received, whether that's Jobseeker's Allowance, Sick Pay or Statutory Maternity Pay. You should also record any income or other benefits you've had from things like employee share schemes. It's all part of the big-picture overview of your finances that the taxman wants to see.

Company Tax

What kinds of tax returns need filing?

A Limited Company has to file a few different kinds of paperwork to stay in business. One of the most obvious is your Company Tax Return. This is how your Corporation Tax is worked out, and mostly has to do with the profits or losses you made.

One thing to keep in mind is that this is separate from your annual return or "confirmation statement".  An annual statement is a yearly check that all the conformation Companies House holds about your company is correct.

Finally, you'll need to file your personal Self Assessment tax return as a director of the company. Self Assessment returns work out how much tax you owe personally, and again are separate from your company's return. Self Assessment is a huge topic, and often leads to people paying too much tax and requiring a tax refund.

Limited Company Tax Returns

Do I need to register for self assessment?

Running a Limited Company means submitting a lot of paperwork to HMRC and Companies House. As part of this, directors have to submit annual Self Assessment tax returns. The Self Assessment system has a lot of twists and turns, and tends to trip up people who aren't used to it. If you're at all unsure of your footing, it's best to call RIFT for professional advice.

Limited Company Tax Returns

Can I get help with my tax returns?

Absolutely! RIFT are the UK's leading tax experts. We can advise on your business' set-up, or even act as your official agent with HMRC. What's more, our specialist tax return service can solve all your personal and company tax return problems. We'll save you money and keep you on the right side of HMRC. Get in touch to see how we can help.

CIS and your limited company

How does CIS work if I run a Limited Company?

The Construction Industry Scheme (CIS) is designed to take tax payments in advance from self-employed people in the building trade. When you’re a contractor, you carve off a chunk of money from your subcontractors’ pay and send it directly to HMRC. That hacked-off chunk is usually 20% - but only if your subbies are registered for CIS. If they aren’t, the deduction rockets up to 30%!

When you’re a subcontractor running a Limited Company of your own, the deductions your contractors make can be used to bring down the Corporation Tax you owe. Alternatively, you might just be able to get it refunded by the taxman.

Construction Industry Scheme

What if my Limited Company's paying subcontractors?

When you’re a contractor with subbies to pay, you have to send a regular report to HMRC about all the CIS deductions you’ve taken from their earnings. You do this on a monthly schedule. It makes no difference if your subcontractors are individual people or companies themselves. It’s just another way of taking tax out of their pay, the same as you would via PAYE.

Limited Company tax returns

What if my limited company is just a subcontractor?

If your company’s doing work for a contractor, and you aren’t using subbies, the contractor will handle your CIS deductions. If you’re registered for CIS, you’ll lose 20% of your pay to the taxman. If not, it’ll be 30%. You might be able to apply for gross payment status, where no CIS deductions are made. Things can get sticky there, though, so you need to know what you’re doing.

You’ll report the amount taken out via CIS in your Employment Payment Summaries to HMRC. At the end of the tax year, there’ll be an online form to fill in on the government website. HMRC uses those figures to work out how much to knock your Corporation Tax bill down by. If you end up in credit, you’ll get a tax refund.

Limited Company tax returns

My Limited Company’s working for a contractor, but I’m also paying other subcontractors

If your company’s using subcontractors, but is doing work for another contractor, then your situation’s a little more complex. Your contractor will still make CIS deductions before paying you, as normal. You’ll then take CIS payments out of your subbies’ pay. The amount you end up sending to HMRC depends on which is higher – the amount the contractor took from your pay or what you’ve taken from your subcontractors’. If you end up losing more in your own CIS payments than you’re taking from your subbies’ cash, then your Corporation Tax bill comes down to settle up. If it’s the other way around, you’ll end up owing HMRC money.
If it sounds fiddly, that’s because it really is. Getting CIS wrong can mean a ton of headaches from the taxman. That’s why it’s so important to get professional help. Talk to RIFT about keeping your CIS situation under control. If you’re earning over £30,000, ask about our specialist RIFT Accounting service for builders.

Need more help?

Wondering if you can claim a tax refund or need to submit a tax return? Use our online tools to find out if you're owed money by HMRC.

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