United Kingdom-Ltd

Basic taxes (briefly)

Personal tax 20-45%
Corporate tax (in detail) Main rate - 19%
Capital gains tax. Details 20%
VAT. Details 20%
Other taxes Real property tax; Inheritance tax; National Insurance Conrtributions
Government fee
Stamp duty 0.5%

International tax agreement

   


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TAXATION

Individual Taxation

Personal Income Tax
Individuals who are resident and domiciled in the UK are subject to tax on their worldwide income and gains. Different treatment may apply where a person, although resident, is not domiciled in the UK.
A new “statutory residence test” (SRT) applies as from 6 April 2013. The SRT is based on a combination of physical presence and connection factors with the UK and other jurisdictions. Domicile is a distinct concept from residence. An individual's domicile status may be determined by the domicile of his/her parents or can be acquired by choice. UK resident, but nondomiciled taxpayers can enjoy favorable tax treatment in respect of income and assets outside the UK.
Residents who are not domiciled in the UK may make a claim for the remittance basis of taxation to apply to overseas income, in exchange for an additional tax liability of GBP 30,000 per annum for taxpayers who have been UK resident for seven out of the past nine years, and rising to GBP 50,000 once resident for 12 out of the last 14 tax years. The remittance basis also may apply without the requirement to make a claim, if (broadly) the unremitted overseas income (and overseas capital gains) is less than GBP 2,000.
Taxable income includes:
  • earnings from employment
  • earnings from self-employment
  • most pensions income (State, company and personal pensions)
  • interest on most savings
  • income from shares (dividends)
  • rental income
  • income paid to you from a trust

Income tax is charged at progressive rates. Income Tax rates 2014 to 15 by tax band and type of income are as follows:
Income, GBP Rate on all income except dividends Rate on dividends
0-2,880 (starting rate for savings) 10% N/A
0-31,865 (basic rate) 20% 10%
31,866-150,000 (higher rate) 40% 32.5%
Over 150,000 (additional rate) 45% 37.5%

Dividends from UK companies and many non-UK companies attract a nonpayable tax credit. (The credit is not available where the individual’s holding in a non-UK company is 10% or more and the company is located in a territory that has not concluded an appropriate tax treaty with the UK.)
Capital Gains Tax
Individuals who are domiciled and resident in the UK are subject to capital gains tax on all chargeable assets, regardless of where they are situated. Similar to the rules for overseas income, an individual who is not domiciled in the UK may make a claim for the remittance basis of taxation to apply to any capital gains on non-UK assets. An annual exemption is available to reduce capital gains (GBP 10,900 for 2013/14), except in tax years where a claim for the remittance basis is made. Where individuals who leave the UK to become nonresident realize gains in a tax year after their departure, such gains are not chargeable to UK capital gains tax, unless the individuals are absent from the UK for less than five tax years and they acquired the asset before they left.
The rate of capital gains tax is determined by the total of capital gains and income. Capital gains tax is payable at a rate of 28% where an individual is liable to pay income tax at the higher rate or the dividend upper rate. For 2013/14, if taxable income is less than GBP 32,011, the rate of capital gains tax is 18%, except to the extent the gains, when added to income, would be in excess of the GBP 32,010 limit. In that case, the excess is taxed at 28%.
Entrepreneurs’ relief reduces the rate of capital gains tax to 10% for certain business assets, subject to a lifetime limit of GBP 10 million of gains per individual. No tax is payable on gains up to the annual exempt amount (GBP 10,900 for 2013/14).
Administration and compliance
The tax year is 6 April to 5 April of the following year.
Tax on employment income is withheld by the employer under the Pay As You Earn (PAYE) system and remitted to the tax authorities. Tax on income not subject to PAYE and capital gains tax are self-assessed. If an individual is required to file a tax return, it must be filed by 31 October (or 31 January, if filing online) after the tax year. Payment of tax is due by 31 January after the tax year.
Individuals are liable to a penalty of GBP 100 for failure to file a tax return by the due date. The penalties escalate if the return is filed more than three months after the due date. Tax-geared penalties also can be sought for matters such as late payment of tax and tax returns that are carelessly or deliberately incorrect. Interest is paid on tax paid late.

Corporate Income Tax

Corporation Tax is a tax on the taxable profits of limited companies and other organisations including clubs, societies, associations and other unincorporated bodies.
A UK resident company is subject to corporation tax on worldwide profits and gains, with credit given for overseas taxes. Foreign profits (and losses) (including those from certain capital assets) arising from the permanent establishment of a UK resident company may be excluded by making an irrevocable election. The effect of the election may be deferred where there have been losses in any of the PEs. There are anti-diversion rules in based on the new CFC rules that may restrict the profits that can be excluded from the charge to UK tax by virtue of the election.
A nonresident company is subject to tax only in respect of UK-source profits, which include the income of a UK PE, income from UK real estate, certain UK-source interest income and gains on assets used for purposes of a PE’s trade.
The following limited companies and unincorporated organisations are subject to Corporation Tax requirements:
  • limited companies incorporated in the UK
  • foreign-based companies with a permanent place of business in the UK
  • members' clubs, such as social clubs, sports clubs and holiday clubs
  • societies, such as friendly societies and provident societies
  • associations, such as housing associations and trade associations
  • co-operatives
  • other unincorporated associations
  • groups of individuals carrying on a business that is not a partnership
  • charities, or companies that are subsidiaries of - or wholly owned by - a charity
  • NHS foundation trusts if they are carrying out significant commercial activities that are not part of core health care delivery, such as running a commercial laundry

Taxable profits for Corporation Tax include:
  • profits from taxable income such as trading profits and investment profits (except dividend income which is taxed differently)
  • capital gains - known as 'chargeable gains' for Corporation Tax purposes

Certain activities carried out by organisations that are otherwise subject to Corporation Tax requirements are exempt from corporation tax:
  • trading profits generated by charities where those profits arise from, and are applied to, charitable purposes
  • profits from any fundraising events run by charities or voluntary organisations provided that those profits are applied to charitable purposes

HMRC defines charitable purposes as carrying out the primary purpose of the charity and/or directly serving the beneficiaries of the charity.
Other activities exempt from Corporation Tax include:
  • agricultural exhibitions or shows if the agricultural society that's running them uses any profits solely for the purposes of the society
  • the sale of permanent health insurance or sickness insurance by a friendly society
  • non-commercial activities connected with core health care delivery undertaken by NHS foundation trusts

Corporation Tax rates
The main rate of Corporation Tax - set at 19%.

Capital Gains Tax

Capital gains form part of a company’s taxable profits. Gains (or losses) on the disposal of substantial shareholdings in both UK and foreign companies can be exempt. The main conditions, broadly, require the selling company to have continuously owned at least 10% of the shares of the company being sold for at least 12 of the 24 months before disposal and the selling company/company being sold must be trading or members of a trading group (without, to a substantial extent, any non-trading activities) for at least 12 months before disposal (in some cases this may have to be 24 months) and immediately after the disposal. When an election has been made to exclude the profits of PEs, the exclusion also may apply to gains and losses of certain capital assets of the PE, unless the company is a close company. A nonresident company generally is not subject to tax on its capital gains unless the asset is held through a UK PE.
A capital gains tax charge was introduced from April 2013 for nonresident companies and certain other vehicles disposing of UK residential property valued at more than GBP 2 million. Exemptions from this charge are available in various circumstances (broadly, where the property is not being used as a residence of shareholder owning 5% or more of the company).

Dividends

A dividend exemption applies to most dividends (and distributions) unless received by a bank, insurance company or other financial trader. Dividends received by a non-small UK company on most ordinary shares and many dividends on nonordinary shares from another company (UK or foreign) are exempt from UK corporation tax, with no minimum ownership period level. The exemption also can apply to small companies receiving dividends (and distributions) from UK companies or foreign companies resident in a jurisdiction that has concluded a tax treaty with the UK that includes a nondiscrimination provision.

Losses

Trading losses generally can offset total profits of the year (including capital gains), with carryback of the excess to the preceding year permitted. Trading losses may be carried forward indefinitely (unless there is a change of ownership of the company and a major change in the nature and conduct of the trade within three years), but can be offset only against trading income. Capital losses may be offset only against capital gains and may only be carried forward.

Tax Year

For Corporation Tax, the tax year is called the 'financial year' or 'fiscal year' and runs from 1 April to 31 March. This is different from the tax year for individual taxpayers, which runs from 6 April to 5 April.
Your company or organisation pays Corporation Tax on taxable profits for each Corporation Tax accounting period, which is normally 12 months long and normally matches your company's financial year. However, certain events or changes of circumstances can cause accounting periods to change. You cannot choose your Corporation Tax accounting period.

Corporation Tax Self Assessment

Corporation Tax Self Assessment means that it's up to you (rather than HMRC) to work out how much Corporation Tax your company or organisation must pay for each Corporation Tax accounting period. You do this by filing your Company Tax Return to HMRC.

Corporation Tax Filing and Payment

Unlike other taxes such as Income Tax or VAT - where in most cases the filing and payment deadlines are identical - this is not the case with Corporation Tax. The deadline to pay your Corporation Tax is before the deadline to file your Company Tax Return. Generally you must:
  • pay by 9 months and one day after the end of your company or organisation's Corporation Tax accounting period
  • file by 12 months after the end of your company or organisation's Corporation Tax accounting period

For example, if your company or organisation's financial year runs from 1 April 2011 to 31 March 2012, and your Corporation Tax accounting period is the same, you must:
  • pay your Corporation Tax for that period by 1 January 2013
  • file your Company Tax Return for that period by 31 March 2013

If your company's profits for an accounting period are at an annual rate of more than £1.5 million, you must normally pay your Corporation Tax for that period in instalments, all of which are due before the deadline to file your Company Tax Return.
You can deal directly with HMRC or you can appoint someone to deal with HMRC on your behalf for your Corporation Tax affairs. This is known as appointing an agent.

Withholding Tax

Dividends: there typically is no withholding tax on dividends paid by UK companies under domestic law, although a 20% withholding tax generally applies to distributions paid by a REIT form its tax-exempt rental profits (subject to relief under a tax treaty).
Interest: interest paid to a nonresident is subject to a 20% withholding tax, unless the rate is reduced under a tax treaty or the interest is exempt under the EU interest and royalties directive. Reduction under a tax treaty is not automatic and advance clearance must be granted by the UK tax authorities.
Royalties: royalties paid to a nonresident are subject to a 20% withholding tax, unless the rate is reduced under a tax treaty or the royalties are exempt under the EU interest and royalties directive. Advance clearance is not required to apply a reduced treaty rate.
Technical service fees: no
Branch remittance tax: no

VAT

VAT is a tax that's charged on most goods and services that VAT-registered businesses provide in the UK. It's also charged on goods and some services that are imported from countries outside the European Union (EU), and brought into the UK from other EU countries.
VAT is charged when a VAT-registered business sells to either another business or to a non-business customer.
When VAT-registered businesses buy goods or services they can generally reclaim the VAT they've paid.
There are three rates of VAT, depending on the goods or services the business provides. The rates are:
  • standard - 20 per cent
  • reduced - 5 per cent
  • zero - 0 per cent

There are also some goods and services that are exempt from VAT or outside the UK VAT system altogether.
Examples of reduced-rated items
These are some examples of goods and services that may be reduced-rated, depending on the product itself and the circumstances of the sale:
  • domestic fuel and power
  • installing energy-saving materials
  • sanitary hygiene products
  • children's car seats

This isn't a complete list of reduced-rated items and services.
Examples of zero-rated items
These are examples of goods and services that may be zero-rated, depending on the product itself and the circumstances of the sale:
  • food - but not meals in restaurants or hot takeaways
  • books and newspapers
  • children's clothes and shoes
  • public transport

This isn't a full list of zero-rated items.
Exempt items
Some items are exempt from VAT because the law says they mustn't have any VAT charged on them. Items that are exempt include the following:
  • insurance
  • providing credit
  • education and training, if certain conditions are met
  • fundraising events by charities, if certain conditions are met
  • membership subscriptions, if certain conditions are met
  • most services provided by doctors and dentists

Selling, leasing and letting commercial land and buildings are also exempt from VAT. But you can choose - or 'opt' - to give up the right to the exemption and to charge VAT at the standard rate instead. This allows you to reclaim input tax when otherwise you wouldn't be able to.
Outside the scope of VAT
There are some things that aren't in the UK VAT system at all - they're outside the scope of VAT. They are not taxable supplies and no VAT is charged on them. Items that are outside the scope of VAT include:
  • non-business activities like a hobby - for example, you might sell some stamps from your collection
  • fees that are fixed by law - known as 'statutory fees' - for example the congestion charge or vehicle MoT tests

VAT Registration

Registration is compulsory for businesses whose taxable supplies exceed £81,000 (for 2014/15) in any given year or where a business expects that its taxable supplies will exceed this threshold within the next 30 days.
Voluntary registration is possible for businesses making taxable supplies below this threshold. Deregistration is possible if taxable supplies fall below £79,000. If a business does not have a place of business in the UK, the registration threshold does not apply. The registration date will be the earlier of the date the business makes taxable supplies in the UK or the date the business expects it will make taxable supplies in the next 30 days.

VAT Tax Period and Returns

VAT return are usually due on a quarterly basis (taxable persons are allocated one of three VAT return periods). A taxable person also may be allowed to complete returns on a monthly basis.
If the VAT return is not filed by the due date or the VAT due is not paid, a taxable person may be liable to a surcharge.

Stamp Duty

Stamp duty is levied on the transfer of UK shares at 0.5% rate, payable by the transferee.
Stamp Duty Land Tax is charged on transfers of UK real property. For residential property, the rates are between 0% and 7%, depending on the value of property. The rates for nonresidential property are 0% to 4%. A 15% rate applies to purchases of residential property valued at more than GBP 2 million by companies and certain other vehicles.
In certain cases, transfers within a tax group may be free from stamp duty.

Government Fee

Other Taxes and Duties

Real property tax The national nondomestic rate is payable by individual occupiers of business premises. Local authorities collect the tax by charging a uniform business rate, which is deductible in computing taxable income.
Inheritance/estate tax Inheritance tax is charged on property passing on death, certain gifts made within seven years of death and some lifetime transfers (e.g. to a discretionary trust). Where due, inheritance tax is payable on assets in excess of GBP 325,000 (2013/14 and 2014/15) at a rate of 40% (20% for certain lifetime transfers). Transfers between spouses, in lifetime or upon death, generally are exempt from inheritance tax unless only the donor spouse has a UK domicile. For nondomiciled individuals, only UK property is subject to inheritance tax, although long-term residence can result in deemed UK domicile (for inheritance tax purposes only) once an individual has been UK-resident in 17 out of the last 20 tax years.
Social security contribution National Insurance Contributions (NIC) are payable by employers, employees and self-employed individuals. For example, for 2013/14, weekly paid employees pay NIC at a rate of 12% on weekly income between GBP 149 and GBP 797 and 2% on income exceeding this amount. For employers, NIC is payable at a rate of 13.8% on all income in excess of GBP 148 per week (for 2013/14).

Anti-Avoidance Rules

Transfer pricing: Comprehensive transfer pricing provisions apply to transactions with both domestic and foreign companies. The UK transfer pricing rules follow OECD principles. This includes a requirement to prepare documentation to demonstrate compliance with the arm’s length standard. Advance pricing agreements are possible in certain situations.
Thin capitalization: The arm’s length principle applies. There are no safe harbor provisions. Advance thin capitalization agreements are available.
Controlled foreign companies: CFC provisions are applicable where, broadly, a UK company has a interest (direct or indirect) of at least 25% in a nonresident company that is controlled by UK residents. New rules apply for accounting periods beginning on or after 1 January 2013, which are more specifically targeted at situations where profits have been artificially diverted from the UK. The regime operates on an income stream basis and there is a “gateway” test and a number of provisions that may apply to exempt a company from the rules. Where the CFC rules do apply, the relevant profits of the CFC are computed as though it were UK resident and its UK shareholder is subject to tax accordingly. In addition, an overseas finance company can be fully or partially exempt from a CFC charge on profits derived from certain overseas group financing arrangements. The partial exemption works by taxing 25% of the finance company profits at the main corporate tax rate (which will result in an effective rate of 5.75%, based on the main rate of 23% that is effective until 1 April 2014).
Other rules: There are many specific anti-avoidance rules. A general anti-abuse rule (GAAR) applies for arrangements entered into on or after 7 July 2014. The GAAR applies across a wide range of taxes, including corporation tax, income tax, capital gains tax and stamp duty. The legislation gives the UK tax authorities power to potentially apply the GAAR to counteract tax advantages arising from tax arrangements that are abusive.
Disclosure requirements: Certain tax arrangements that result in a UK tax advantage and fall within prescribed hall marks must be disclosed to the UK tax authorities by, for example, a promoter, and the user must note the use of such arrangements on the tax return. Separately, certain transactions valued at more than GBP 100 million, involving, for example, the issue of shares or debentures by, or the transfer or permitting the transfer of shares or debentures of, a foreign subsidiary of a UK company, also have to be reported to the UK tax authorities within 6 months of the transaction. There is a list of excluded transactions that do not need to be reported.

The UK has exchange of information relationships with 146 jurisdictions through:
  • 129 DTC: Albania, Algeria, Argentina, Armenia, Australia, Austria, Azerbaijan, Bahrain, Bangladesh, Barbados, Belarus, Belgium, Belize, Bolivia, Bosnia and Herzegovina, Botswana, Brunei Darussalam, Bulgaria, Canada, Cayman Islands, Chile, China, Colombia, Croatia, Cyprus, Czech Republic, Côte d'Ivoire, Denmark, Egypt, Estonia, Ethiopia, Falkland Islands (Malvinas), Faroe Islands, Fiji, Finland, Former Yugoslav Republic of Macedonia, France, Gambia, Georgia, Germany, Ghana, Greece, Grenada, Guernsey, Guyana, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Italy, Jamaica, Japan, Jersey, Jordan, Kazakhstan, Kenya, Kiribati, Korea (Republic of), Kosovo, Kuwait, Latvia, Lesotho, Libya, Liechtenstein, Lithuania, Luxembourg, Malawi, Malaysia, Malta, Mauritius, Mexico, Moldova (Republic of), Mongolia, Montenegro, Montserrat, Morocco, Myanmar, Namibia, Netherlands, New Zealand, Nigeria, Norway, Oman, Pakistan, Panama, Papua New Guinea, Philippines, Poland, Portugal, Qatar, Romania, Russian Federation, Saudi Arabia, Senegal, Serbia, Sierra Leone, Singapore, Slovakia, Slovenia, Solomon Islands, South Africa, Spain, Sri Lanka, Sudan, Swaziland, Sweden, Switzerland, Tajikistan, Thailand, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Tuvalu, Uganda, Ukraine, United Arab Emirates, United States, Uruguay, Uzbekistan, Venezuela, Viet nam, Zambia, Zimbabwe.
  • 26 TIEA: Anguilla, Antigua and Barbuda, Aruba, Bahamas, Belize, Bermuda, Brazil, Curaçao, Dominica, Gibraltar, Grenada, Guernsey, Isle of Man, Jersey, Liberia, Liechtenstein, Macao (China), Marshall Islands, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, San Marino, Sint Maarten, Turks and Caicos Islands, Uruguay, Virgin Islands, British

Foreign exchange control

There are no foreign exchange controls in the UK.

ACCOUNTS

Accounting Records

Do all companies have to keep accounting records?
Yes. Every company, whether or not they are trading, must keep accounting records.
What must accounting records include?
Accounting records must in particular contain:
  • entries showing all money received and expended by the company
  • a record of the assets and liabilities of the company

Also, where the company’s business involves dealing in goods, the records must contain:
  • statements of stock held by the company at the end of each financial year
  • all statements of stock takings from which you have taken or prepared any statements of stock
  • statement of all goods sold and purchased, other than by ordinary retail trade. This should list the goods, the buyers and sellers

Parent companies must ensure that any subsidiary undertaking keeps sufficient accounting records so that the directors of the parent company can prepare accounts that comply with the Companies Act or International Accounting Standards.
Where must a company keep its accounting records?
A company must keep its accounting records at its registered office address or a place that the directors think suitable. The records must be open to inspection by the company’s officers at all times.
If the company holds the records at a place outside of the UK, it must send accounts and returns at least every six months and keep them in the UK. Those accounts and returns must disclose the financial position and enable the directors to prepare accounts that comply with the requirements of the Companies Act, including where the accounts are prepared using International Accounting Standards.
How long must a company keep its records?
Private companies must keep accounting records for 3 years from the date they were made. Public companies must keep them for 6 years.

Accounts

All UK companies must prepare annual accounts reflecting financial state of the company and results of its activity for the given year.

Preparation of Accounts

Who is responsible for preparing accounts?
The directors of every company must prepare accounts for each financial year. These are called individual accounts. A parent company must also prepare group accounts.
What does a set of accounts include?
Generally, accounts must include:
  • a profit and loss account (or income and expenditure account if the company is not trading for profit)
  • a balance sheet signed by a director on behalf of the board and the printed name of that director
  • notes to the accounts
  • group accounts (if appropriate)

And accounts must generally be accompanied by:
  • a directors' report signed by a secretary or director and their printed name, including a business review (or strategic report) if the company does not qualify as small
  • an auditors' report stating the name of the auditor and signed and dated by him (unless the company is exempt from audit)

What period must the accounts cover?
A company's first accounts cover the period starting on the date of incorporation, not the first day of trading. They end on the accounting reference date or up to 7 days either side of that date.
Subsequent accounts start on the day after the previous accounts ended and finish on the accounting reference date or up to 7 days either side of it.
For example, if a company is incorporated on the 6 April 2014 the accounts must cover the entire period of 6 April 2014 – 30 April 2015. Subsequent periods will start on 1 May each year and end on 30 April the following year.
How is the accounting reference date determined?
For all new companies, the legislation sets the first accounting reference date as the last day in the month in which its first anniversary falls. The subsequent accounting reference dates will automatically be on the same date each year. For example, if the company was incorporated on 6 April 2008 its first accounting reference date would be 30 April 2009 and 30 April for every year thereafter.
Can I change the accounting reference date?
Yes, you can change the current or the immediately previous accounting reference period so as to extend or shorten the period. To do this you must notify Companies House of a change of accounting reference date on Form AA01. You must submit an acceptable change of accounting reference date before the filing deadline of the accounts for the period that you wish to change. In other words, if accounts for a particular accounting reference period become overdue, it is too late to change the accounting reference date.
What if a company cannot afford a professional accountant?
There is no requirement for companies to use a professional accountant to prepare their accounts. However, directors should be aware of their legal responsibilities regarding accounts and if they are uncertain about the requirements they may consider seeking professional advice.
Does every company have to send accounts to members etc?
Every company must send a copy of its annual accounts for each financial year to -
  • every member of the company
  • every holder of the company's debentures
  • every person who is entitled to receive notice of general meetings

Does a company have to lay its accounts before a general meeting?
There is no longer a statutory requirement for private companies to lay their accounts before members at a general meeting. If a private company’s articles currently specify that the company must lay accounts before members at a general meeting, they may pass a special resolution to remove that provision.
Can a company pass a resolution to use a website as way of showing members the accounts?
Yes. A company may pass a resolution or make provision in its articles that the company may send or supply documents, including accounts, to members by website. Members do not have to agree to receive communications in this way and have the right to request a paper copy.
Who can approve and sign accounts?
The company's board of directors must approve the accounts before they send them to members etc.
  • a director must sign the balance sheet on behalf of the board and print their name, with any exemptions statements appearing above the director's signature
  • a director or the company secretary must sign the directors' report on behalf of the board and print their name. Any statement about its being prepared under the small companies regime must appear above the signature
  • if the company has to attach an auditor’s report to the accounts, the report must include the auditor’s signature and their name must be printed

Where the auditor is a firm the auditor’s report must state the name of the auditor and the name of the person who signed it as senior statutory auditor on behalf of the firm.

Filing Accounts

Are the accounts filed with Companies House different to the accounts prepared for the members?
You can simply file a copy of the accounts that you have already prepared for the members/shareholders at Companies House. However small and medium-sized companies may file an abbreviated version of those accounts which has less detail by combining certain items.
Do all companies have to file their accounts at Companies House?
All private limited companies must file their accounts at Companies House.
How long do I have to file my company's first accounts?
If you are filing your company's first accounts and those accounts cover a period of more than 12 months, you must deliver them to Companies House:
  • within 21 months of the date of incorporation for private companies
  • 3 months from the accounting reference date, whichever is longer
The deadline for delivery to Companies House is calculated to the exact day.
For example, a private company incorporated on 1 January 2014 with an accounting reference date of 31 January has until midnight on 1 October 2015 (21 months from the date of incorporation) to deliver its accounts, not 31 October.
How long do I normally have to file my accounts?
Unless you are filing your company's first accounts the time normally allowed for delivering accounts to Companies House is:
  • 9 months from the accounting reference date for a private company

Can I apply for extra time to file?
Yes. If there is a special reason for doing so, you may apply to extend the time for delivering accounts to Companies House; for example, if there has been an unforeseen event which was outside the control of the company and its auditors.
You should make the application in writing and deliver it before the normal filing deadline. It must contain a full explanation of the reasons for the extension and the length of the extension requested.
What if I deliver the accounts late?
Failure to deliver accounts on time is a criminal offence. In addition, the law imposes a civil penalty for late filing of accounts on the company. The amount of the penalty depends on how late the accounts arrive:
Length of delay Penalty
Not more than 1 month £150
More than 1 month but not more than 3 months £375
More than 3 months but not more than 6 months £750
More than 6 months £1500

What if the filing deadline falls on a Sunday or a Bank Holiday?
If a filing deadline falls on a Sunday or Bank Holiday, the law still requires you to file the accounts by that date. To avoid a penalty, please ensure that you send acceptable accounts in time to arrive before the deadline.
It is the date that you deliver acceptable accounts which meet the relevant legal requirements to Companies House that is important, not the date that you sent the accounts.
What if I do not submit accounts to Companies House at all?
If the Registrar believes that a company is no longer carrying on business or in operation, he could strike it off the register and dissolve it. If this happens all the assets of the company, including its bank account and property, generally become the property of the Crown.
Failure to deliver documents is a criminal offence. All the directors of the company risk prosecution. On conviction, a director could end up with a criminal record and a potentially unlimited fine for each offence. This is separate from the civil penalty imposed on the company for late filing of accounts.

Abbreviated Accounts for Micro-Entity

Some kinds of UK companies including micro-entity, small and medium companies, can prepare abbreviated accounts.
A micro-entity must meet at least two of the following conditions:
  • turnover must be not more than £632,000
  • the balance sheet total must be not more than £316,000
  • the average number of employees must be not more than 10

An entity cannot prepare and submit micro-entity accounts if it is, or was at any time during the financial year, one of the following:
  • a limited liability partnership
  • a limited partnership
  • a qualifying partnership as defined under the Partnership (Accounts) Regulations 2008
  • a public limited company
  • an overseas company
  • an unregistered company
  • a company authorised to register under section 1040 Companies Act 2006
  • a charitable company
  • a company that is excluded from the small company’s regime under section 384 Companies Act 2006, or is excluded from being treated as a micro-entity under section 384B Companies Act 2006.

Micro-entity accounts include the following elements:
  • A balance sheet that complies with one of the specified formats given in the relevant regulations, along with any footnotes
  • A directors’ report
  • A profit & loss account that complies with the specified format given in the relevant regulations
  • An auditors report, unless the company is claiming exemption from audit as a small company
  • Any notes to the accounts

Micro-entities can prepare and file a balance sheet with a reduced set of information than that required by a small, medium or large company.
Additionally, a micro-entity will be able to benefit from the exemptions available to small companies such as exemption from audit and the requirement to file a directors’ report or profit & loss account at Companies House.

Abbreviated Accounts for Small Company

A small company must meet at least two of the following conditions:
  • annual turnover must be not more than £6.5 million
  • the balance sheet total must be not more than £3.26 million
  • the average number of employees must be not more than 50

A company cannot prepare and submit small company accounts if it is, or was at any time during the financial year, one of the following:
  • a public company
  • a member of an ineligible group (see below)
  • an authorised insurance company, a banking company, an e-money issuer, a MiFID (i.e. Markets in Financial Instruments Directive) investment firm or a UCITS (i.e. Undertakings for Collective Investment in Transferable Securities) management company or carried on insurance market activity

A group is ineligible if any of its members is:
  • a public company
  • a body corporate (other than a company) whose shares are admitted to trading on a regulated market in an EEA State
  • a person (other than a small company) who has permission under Part IV of the Financial Services and Markets Act 2000 to carry on a regulated activity
  • a small company that is an authorised insurance company, a banking company, an e-money issuer, a MiFID investment firm or a UCITS management company
  • a person who carries on insurance market activity

Generally, small company accounts include:
  • a profit and loss account
  • a full balance sheet, signed by a director on behalf of the board and the printed name of that director
  • notes to the accounts
  • group accounts (if a small parent company chooses to prepare them)

And they should be accompanied by:
  • a directors' report that shows the signature of a secretary or director and their printed name
  • an auditors report that includes the printed name of the registered auditor (unless the company qualifies for exemption from audit and takes advantage of that exemption)

Small companies can prepare and file simpler, less detailed accounts than those required by large and medium companies.
A small company can file a copy of the accounts which it prepared for its members, or an abbreviated version of those accounts. Small companies do not have to deliver a copy of the directors’ report or the profit and loss account to Companies House.

Audit Medium-Sized Company Accounts

To be a medium-sized company, you must meet at least two of the following conditions:
  • annual turnover must be no more than £25.9 million
  • the balance sheet total must be no more than £12.9 million
  • the average number of employees must be no more than 250

A company cannot be treated as a medium-sized company if it is, or was at any time during the financial year, one of the following:
  • a public company
  • a company that has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity or that carries on an insurance market activity
  • a member of an ineligible group

A group is ineligible if any of its members is:
  • a public company
  • a body corporate (other than a company) whose shares are admitted to trading on a regulated market
  • a person (other than a small company) who has permission under Part 4 of the Financial Services and Markets Act 2000 to carry on a regulated activity
  • a small company that is an authorised insurance company, a banking company, an e-money issuer, a MiFID (ie Markets in Financial Instruments Directive) investment firm or a UCITS (ie Undertakings for Collective Investment in Transferable Securities) management company
  • a person who carries on insurance market activity
  • Medium-sized accounts must include: a profit and loss account
  • a balance sheet, showing the printed name and signature of a director
  • notes to the accounts
  • group accounts (if appropriate)

And should be accompanied by:
  • a directors' report including a business review (or strategic report) showing the printed name of the approving secretary or director
  • an auditor’s report that includes the name of the registered auditor unless the company is exempt from audit

Audit

If UK company is not exempt from audit, its account should be checked by an auditor, and auditors’ report should be attached to the accounts for members and Companies House.
Before the first general meeting directors can appoint the auditor themselves. After that auditors are appointed by the general meeting. Auditor should be a member of an authorized association.
The auditor’s report must include:
  • an introduction identifying the accounts that were the subject of the audit
  • a description of the scope of the audit identifying the auditing standards used and the financial reporting framework used in the preparation of the accounts
  • a statement as to whether in the auditor’s opinion the accounts have been prepared in accordance with the Companies Act 2006 and, where appropriate, in accordance with Article 4 of the EU Regulation on International Accounting Standards, (Regulation (EC)1606/2002, the "IAS Regulation")
  • a statement as to whether they give a true and fair view of the company’s or (in the case of group accounts) group’s financial affairs
  • a statement as to whether the directors’ report is consistent with the accounts
  • if the auditors are of the opinion that the company has not kept adequate accounting records, a statement to that effect
  • if the company has not provided the auditors with all the information they need to complete the report, a statement to that effect

The auditor’s report must be either unqualified or qualified and include a reference to any matters to which the auditors wish to draw attention by way of emphasis without qualifying the report. The auditors will qualify the report where either there has been a limitation on the scope of the auditors’ work or where there is a material disagreement between the company and the auditors about the accounts.
To qualify for audit exemption, a company must qualify as small in relation to that financial year. In other words it must meet any two of the following:
  • annual turnover must not be more than £6.5 million
  • the balance sheet total of not more than £3.26 million
  • the average number of employee must be not more than 50

You have the same time for filing both audited and audit exempt accounts, and the law imposes the same penalties as for late filing of all other accounts.

Annual Return

Which companies must send an annual return to Companies House?
Every company must deliver an annual return to Companies House at least once every 12 months. The company's director(s) and the secretary (where applicable), are responsible for ensuring that they deliver the annual return to Companies House within 28 days after the anniversary of incorporation of a company or of the anniversary of the made-up date of the last annual return.
If you do not deliver the company’s annual return, the Registrar might assume that the company is no longer carrying on business or in operation and take steps to strike it from the register.
What is an annual return?
An annual return is a snapshot of certain company information at the made-up date. It is a separate document from a company's annual accounts. An annual return must contain the following information:
  • the name of the company
  • its registered number
  • the date to which the annual return is made-up (the made-up date)
  • the principal business activities of the company
  • the type of company it is, for example, private or public
  • the registered office address of the company
  • the address (single alternate inspection location - SAIL) where the company keeps certain company records if not at the registered office, and those records held there
  • the details of the company secretary (corporate or individual), where applicable
  • the details of all the company's directors (corporate or individual)

What is the made-up date?
This is the date at which all the information in an annual return must be correct. The made-up date is usually the anniversary of:
  • the incorporation of the company, or
  • the made-up date of the previous annual return registered at Companies House

Is there a fee for filing the annual return?
Yes. There is an annual document-processing fee of £40 for paper documents or £13 for users of our Software Filing or WebFiling services which is payable when you file the annual return. Companies that file a paper annual return should make the cheque payable to 'Companies House' and write the company number on the reverse.

Tax Returns

Unlike other taxes such as Income Tax or VAT - where in most cases the filing and payment deadlines are identical - this is not the case with Corporation Tax. The deadline to pay your Corporation Tax is before the deadline to file your Company Tax Return. Generally you must:
  • pay by 9 months and one day after the end of your company or organisation's Corporation Tax accounting period
  • file by 12 months after the end of your company or organisation's Corporation Tax accounting period

For example, if your company or organisation's financial year runs from 1 April 2011 to 31 March 2012, and your Corporation Tax accounting period is the same, you must:
  • pay your Corporation Tax for that period by 1 January 2013
  • file your Company Tax Return for that period by 31 March 2013

If your company's profits for an accounting period are at an annual rate of more than £1.5 million, you must normally pay your Corporation Tax for that period in instalments, all of which are due before the deadline to file your Company Tax Return.
Companies are liable to a fixed penalty of GBP 100 for failure to file a tax return by the due date, plus and additional GBP 100 if the return is not submitted within 3 months of the due date. Further penalties may apply to returns filed at least six months late. Tax-geared penalties can be sough for natters such as tax returns that are carelessly or deliberately incorrect, although such penalties can be reduced depending on the taxpayer’s behavior. Interest is paid on late paid tax.

    Taxes of UK

    Min. rate for corporate tax 19%
    Capital gains tax Regular rate
    VAT 20%
    Withholding tax 0%/20%/20%
    Exchange control No
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