Understanding Annual Accounts, Tax Returns, Corporation Tax, and Self-Assessment

Anyone living in the UK and running a corporation needs to prepare annual accounts and a Company Tax Return with HMRC and the Companies House. Additionally, these individuals are also responsible for Corporation Tax, Income Tax, tax on dividends, National Insurance, and other obligations like the VAT registration and PAYE for employees. 

This guide will talk about the different responsibilities that the director of a company has in the UK and whether they should rely on UK tax return services to do the same or file these taxes themselves. Use this guide to learn what your responsibilities are and what they require. 

Preparation of Annual Accounts 

A company director needs to report all the financial activities of the company to the HMRC, which is the official tax authority in the UK, and Companies House by preparing the annual accounts and filing them. 

Accounts for HMRC: 

• Prepare a proper record of your annual accounts 
• This should also include a part of the Company Tax return 
• The report should be delivered online no later than 12 months after the accounting period for the company’s corporation tax has ended. 

Accounts for Companies House:

• You should prepare full or abridged annual accounts, depending on the size of your company, and deliver them online. 
• The first accounts are due 21 months after the company has been formed. 
• The subsequent accounts are due 9 months after the financial year of a company has ended. 

Preparation of Company Tax Return

Along with the HMRC tax return filing, a director of a company is also required to prepare a Company Tax Return annually. Whether your business makes a loss or/and/or you have no corporation tax to pay, you need to create a tax return that includes full statutory accounts. 

This tax return is used to determine the profit or loss for Corporation tax and find out how much corporation tax a business needs to pay. People can take the assistance of Corporation tax return services, or they can do the same themselves. The report should be delivered to the HMRC online within 12 months after the accounting period of a company has ended. 

Preparation of Corporation Tax 

If you are operating a limited company, you are also required to register for Corporation Tax within three months after the business has started. There are different rates of Corporation Tax that will be applied to the profit that your business generates: 

• 19% of your company is making a profit of £50,000 or less.
• 25% if your company is making more than £250,000 as profit. 
• The main rate is reduced by a ‘Marginal Relief” if your profit is somewhere between £50,000 and £250,000. 

You are required to calculate and report the tax liability to the HRMC, as they will not send you a corporation tax bill. 

These are all the important taxes that the director of a company is required to fill out, along with the Self-Assessment tax. There are numerous self assessment tax return services that assist businesses in completing all these tasks.