Types of Businesses

1. Self-Employed Sole Trader

If you start to work for yourself you are classified as Self-Employed Sole Trader),  You must be registered within 6 months after the financial year end. The fiscal year begins with 6-April, and ends on April 5. As an entrepreneur, you can carry out almost any type of work with the minimum requirements for accounting. Also, you can hire staff. After the end of the fiscal year, you must send your tax return electronically. The deadline for the declaration - before January 31. 

Tax Obligations

As an entrepreneur you have to:

  • Annually complete and send your tax return for Self Employed to HM Revenue & Customs;
  • Pay income tax on business profits;
  • Pay NI(National Insurance, the equivalent of a medical, social tax).
  • NOTE: You must register for VAT if your annual turnover of your business reaches £ 82,000.

    Positive Sides This type of business is exceptionally easy on registration, as well as, in the simplicity of documentation required.
    Negative Sides - This acquires more attention from tax inspection on private entrepreneurs. All profits are taxed, which is much higher corporate tax rate..

    2. Private Limited Company

    Private Limited Company - Is a company located in the UK, a company taxable under the general rules, and is obliged to provide financial record reportsby certain legally required deadlines. The company must have at least one director who is not required to be a shareholder of the company. The company's shareholders may be both individuals and legal entities.

    Duties of the Director

    As a director of Private Limited Company you must:

  • Follow the company rules, which are underwritten in its articles of association;
  • Store all company documents, records and report any changes regarding the company, to HM Revenue & Customs and Companies Register;
  • Director must ensure that the company's records are accurate and reflect the financial business operation;
  • Director shall annually file a tax return for Self Employed.
  • Tax Obligations

    Each Private Limited Company should:

  • Annually file the financial statements and tax returns;
  • Complete annual record confirmation in the Register of Companies;
  • Pay tax and national insurance in the if a company pays salary to workers;
  • VAT is usually paid on a quarterly basis. NOTE: You must register for VAT if your annual turnover of your business reaches £ 82,000;
  • Corporation Tax is paid in 9 months and 1 day after the end of the reporting period.

    Positive Sides of this type of business consists in its taxation. The corporation tax rate is 20% of the net profit of the company Additionally the company does not hold an additional tax for dividends.
  • Negative Sides is the need to conduct diligent documentation and record keeping.

    3. Public Limited Company

    Unlike LTD, registered capital of a Public Limited Company is divided into shares in the stock market. The authorized capital of the Open Society limited liability company may not be less than 50,000 pounds. The state registration of a company is permitted only after the release of the outstanding shares in the amount of 100% of its share capital and a cash payment of not less than 25% of its authorized capital. In a Public Limited Company there should at least a Director and the Secretary, or two directors, one of which is delegated to perform the duties of the Secretary. In contrast to the secretary of Private Limited Company, the secretary of a Public Limited Company must have the necessary training and experience, or, in their absence, to be approved in the position of the majority of shareholders.

    Positive Sides lies in the fact that the company can sell its shares on the stock exchange and to raise additional capital.
    Negative Sides is the high level of the authorized capital and high requirements for reporting and auditing.


    •   National insurance

      National Insurance is paid in the case:

      - you are 16 years old or above;
      - your earnings exceed £155 per week;
      - if you are Self Employed, entrepreneur and earn £5,965 annually and above;
      In order to start working in the UK, you need to get National Insurance Number.

      О national insurance
      О ставках national insurance 2015-2016

    •   VAT

      You can be registered for VAT voluntarily, but if your business turnover reaches £82,000 and above, you should immediately be registered for VAT.

      The VAT rates:
      - Standard rate – 20%
      - Reduced rate – 5%
      - Zero rate – 0%

      For a list of rates for goods and services can be found at this link


      The following VAT scheme exist:

      1. Annual VAT scheme Features of this scheme lies in the fact that podaetsya only one annual report, quarterly and not 4 as in conventional schemes. VAT can be paid within a year or nine-monthly three quarterly payments. Also in this scheme, you must make an advance payment of VAT, which is based on the VAT paid in the past year. If the company is registered for VAT less than 12 months, the prepayment amount will be estimated.
      2. VAT Cash Scheme means the payment of the difference between the expenditure and revenue of VAT. The report is available each quarter,.
      3. Fixed rate VAT scheme When billing the customer the basis of a 20% VAT. Her Majesty Revenue and Customs Tax is paid at a fixed rate (the rate depends on the type of business activity), and the difference between the exposed and your VAT rate is you.List of fixed rates for different types of businesses.

    •   Corporation tax

      You are required to pay corporation tax if your business:
      - Is a registered company in the UK
      - Any foreign company that has an office in the UK
      - Club, Sports Club, and other non-profit organizations.

      As a business that is subject to corporation tax, you must:
      1. Register your company on corporation tax.
      2. Keep accounting records, calculations, prepare corporate tax return and calculate the amount of corporate tax.
      3. Pay corporate tax no later than 9 months and 1 day after the end of the financial year your company.
      4. Send a corporate tax return no later than 12 months after the end of the fiscal year for your company.
      Late payment or late submission of the declaration can be fined.

      The corporate tax rate from April 1, 2015 - 20%

    •   Personal tax

      Personal tax is a tax on the profits that you personally have received. Profit is divided into taxable and non-taxable. For example the following is taxable income:
      - Salary
      - profits derived by an individual entrepreneur
      - some benefits
      - income from the majority of pensions, including state pensions, company and personal pensions
      - Interest on savings and pension bonds
      - income from house rental (but not in the case if you rent a room in their house or apartment and the income from the rental of rooms less than £ 4,250 per year)
      - the benefits that you get from work
      - income from trust funds
      - dividends

      Not taxable income of the following:
      - premium bond or winning the lottery
      - income from house rental (if you rent a room in their house or apartment, and by delivery the income from rental does not exceed £ 4,250)
      - income from other tax exempt funds (ISAs, NSC)

      taxable minimum

    England and Wales Registration Number 07980822. VAT registration number 179695044. Registered office address: Office 2, Derby House, 123 Watling Street, Gillingham, Kent, ME7 2YY.

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