Five types of business tax that you should know about

Tax can be a painful subject and the chances are, you don’t want to pay it. However, in most cases it is essentially just another cost of doing business.

What is business tax?

If you run a business in the UK, there are various taxes that you are required to pay and they vary depending on whether it’s a limited company or you’re self employed. Many of the questions we’re asked when people come in for a free consultation revolve around the differences in these business set-ups. The main areas that business owners are interested in are:

  1. Company returns – what this means and how it differs to personal tax. Here’s the answer.
  2. Capital Gains Tax (CGT) – and what this includes. Find out here.
  3. Management Accounts – and how they can help you stay in control of your business. We can tell you.
  4. Statutory Accounts – who’s responsible for these? Probably you!
  5. Self-assessment – whether being a sole trader or owning a large firm makes a difference. Does it?

Most business owners prefer to hand over responsibility for preparing and submitting their accounts to a professional, but sometimes they’re left in the dark about what the accountant is actually doing for them. So…

What does a tax accountant do?

  1. Makes sure you don’t pay any more tax than you need to within the law.
  2. Ensures that you benefit from all your tax allowances and entitlements.
  3. Contributes to the bigger picture of your business’ success.
  4. Recognises that every business is unique.

Nordens Chartered Accountant and Business Advisers | Strategic Business Planning | London | Essex | Award winning accountant

The history of business tax

If you’re at all interested in trivia, we can tell you that direct income tax was first introduced in 1799 in order to pay for the Napoleonic wars. It’s obviously evolved beyond recognition over two centuries, with a constant stream of changes. Another interesting fact is that a woman’s income was added to the husband’s, right up until the 1990s when independent taxation was created. Unbelievable in the current age!

PAYE came into operation in 1944 and Capital Gains Tax and Corporation Tax were both introduced in 1965.

If you think your tax rate is high, consider this… The highest rate of income tax was in the 1970’s – 83% – and there was an investment income surcharge of 15%, making a top rate of a whopping 98%!

Your business, your tax return

There are loads of things to consider when we prepare a client’s Personal Tax Return or their Company Tax return and calculate their liabilities. No one’s tax return is the same as anyone else’s so we go out of our way to learn about each client’s business, needs and goals.

If you’d prefer to find out how we can help your business to be tax-efficient and move forward more profitably, click the green button and arrange your free consultation with a member of our award-winning team.