In the United Kingdom, taxation may include payments to at least three separate government levels: the central government (Revenue and Customs of Her Majesty), devolved governments, and local government. The central government’s revenues come mainly from income tax, payments from national insurance, value-added tax, corporation tax, and fuel duty. Revenues from the local government come mostly from grants from central government funds, business rates in England, Council Tax, and increasing charges such as on-street parking fees. We will discuss two forms of taxes in detail. Income tax and VAT. Both are the main source of government income.
Income Tax
Income Tax is a tax on the income that you pay to the government. You are not supposed to pay income tax on all forms of income. This tax usually levies on the money you earn from work, profits that you make if you are self-employed, including services that you offer through websites or applications, certain benefits you get from the state, some grants, including the Support Scheme for Self-Employment Income, the Small Business Grant Fund, the Grant Fund for Retail, Hospitality, and Leisure, the Coronavirus Work Retention Scheme, and the Payment of Test and Trace Support and pensions. Payment of income tax is so handy in the UK, but most small businesses prefer to avail income tax return services to save their time and money.
Methods to Pay Tax
Here are some methods to pay your income tax below:
Pay as You Earn (PAYE)In the UK, most individuals pay income tax via PAYE. This is the method that the employer or pension provider uses when paying your salary or pension to collect Income Tax and National Insurance contributions. Your tax code advises your company how much it is appropriate to claim.
- Tax on State Benefits
Your tax code will take taxable state benefits into account, but if you owe them a tax (such as a state pension), it’s usually automatically deducted from your other income.
If your income is merely the State Pension, HM Revenue and Customs (HMRC) will write to you if you owe Income Tax. You will need a Self-Assessment tax return to be filled in.
- Self-Assessment Tax Returns
You will pay Income Tax and National Insurance by Self-Assessment if your financial affairs are more complicated (for example, you are self-employed or have a high income). Per year, you will need to fill up a tax return. If you earn more than either one, you must also fill up a tax return:
- £1,000 from self-employment
- £ 2,500 from other untaxed revenue, such as tips or land rental.
VAT
Value-added tax (VAT) refers to the consumption tax levied on a commodity once the value is added at each level of the supply chain, from the point of production to the point of sale. The VAT amount paid by the consumer relates to the product’s cost, excluding any of the prices already taxed on the products used in the product.
Normally, you send a VAT return every three months to HM Revenue and Customs (HMRC). You can do it on your own, or you can easily get VAT registration services from any accounting firm in London. Your ‘accounting cycle’ is known as this period of time. For the accounting period, the VAT return records the stuff like:
- Your cumulative purchases and sales
- The amount of VAT due to you
- The sum of VAT that you can recover
- Your HMRC VAT refund
Even if you do not have any VAT to pay or recover, you must request a VAT return.
Registration for VAT
If the VAT taxable overturns is more than £ 85,000, you must register your company for VAT with HM Revenue and Customs (HMRC).
You will get a VAT registration certificate when you file. This will confirm:
- Your amount of VAT
- When to make the first return and payment of your VAT
- Your ‘successful registration date’ – this depends on the date you met the threshold, or whether it was voluntary, the date you applied to register.
If your turnover is less than £85,000, you can enroll voluntarily, unless anything you sell is excluded. If you register for VAT, you’ll have those duties. There are numerous accounting firms working in London providing VAT return services to businesses who do not want to take the headache of dealing with return filing matters. AT WeAccountax, you can avail of both Income tax return and VAT return service. We have accountants who are experts in tax matters and have experience of working with a variety of businesses in London. Once you hire us, your tax payments will be our responsibility.
WeAccountax 