FIVE SMALL BUSINESS TAXES YOU NEED TO KNOW ABOUT
August 28th, 2018.


When you’re running your own business, it’s almost a certainty that you’ll have to pay some kind of tax at some point. But with so many complicated tax rules currently in place in the UK, it can be difficult to know exactly which ones apply to you or your business, and which types of tax you’ll actually have to pay to HMRC.


Here are the five small business taxes to check up on.

Income tax
Sole trader tax is paid on your business’s profit. Assuming you don’t have any other income, such as salary from a job, as well as what your business makes, then you’ll start paying income tax on your business’s profit once it goes over the personal allowance, which is £11,850 if you’re under 75.

If your business is a limited company, you could pay income tax on any salary or dividends you take from the company. Whether you pay income tax, and how much you pay, depends on how much you take out.

Income tax kicks in on your salary if it’s over £11,850, you’re under 75 and you have no other income. If your circumstances are different – say you have another job as well as working for your own company – then you may start paying income tax on your salary sooner.

If you’re paying income tax on your salary, your employer, in this case your own company, will deduct it from your salary under the PAYE (Pay As You Earn) scheme. PAYE isn’t a tax in its own right; it’s a method HMRC use to collect income tax.


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