Corporation Tax Deadline Calculator

 


 

Startup Cost Calculator

Try our startup cost calculator – to estimate the costs of starting your business. Startup costs  generally refer to the costs incurred by you before your business is trading and established.

So for example you may be employing staff before you actually start trading – maybe to help you set up. Or you may need trade licenses before you can legally trade in your line of business – these would be startup costs.

 

If you need any help or advice on your startup venture – get in touch with us on 0207118229.

 

R&D Tax Credits for Small Businesses

Research and Development Tax Credits (R&D Tax Credits) 

Although the R&D Tax Credits Scheme has been in place since 2000 many businesses are not aware that they are eligible for these tax credits. Currently, £2 billion in tax credits are being claimed every year.

R&D tax credits are a key part of the government’s strategy to support innovation in the UK.

The R&D Tax Credits incentive scheme is essentially designed to encourage innovation and increase business spending on R&D activities for companies operating in the United Kingdom. It’s one of the government’s most rewarding incentives for encouraging investment in research and development and allows up to 33.35% of a company’s R&D spend to be recovered as a cash repayment..

So one might wonder, what is the catch? 

 

Well, there are restrictions which apply to what can be considered ‘Eligible R&D Expenditure’
Firstly, your business needs to be spending a minimum of £20000 on R&D.
Secondly, your business needs to be actively trading and a going concern.
Lastly, your business should not have paid for the R&D expenses using any other government funding.

What are costs can you claim on?

  • Expenditure on staff including salaries, employer’s NIC and pension contributions.
  • Expenditure on subcontractors and freelancers.
  • Expenditure on materials and consumables including heat, light and power that are used up or transformed by the R&D process.
  • Expenditure on some types of software.

 

How Much R&D Tax Relief are you eligible for?
This depends on whether your business is in loss or profit.

If your business in profit, you are eligible for 26%
If your business is in loss, you are eligible for the higher tax credits rate of 33.35%

 

What is the claims process like?
HMRC processes R&D tax credits. The processing time is only 4 to 6 weeks. The claim can be made via your Company Tax Return (CT600). It is advisable to include an R&D Tax Credits Claim Report to justify the expenses that you are claiming. In either case, you may be contacted by an HMRC agent to verify information in your report or be asked to submit further evidence to support your claims. In some cases, an HMRC agent may need to visit your site to perform further verification checks related to your claim.

 

How can In2Accounting Help ? 

We can assist you with the analysis of your expenditure and calculation of your potential R&D tax credits. We can also submit your Tax Return and R&D Claim. While it is not required, but highly recommended for a successful claim – we will also write your R&D Claim Report detailing your expenditures and their attributes which make them eligible for tax credits.

For a quick, efficient and afforable service get in touch with In2Accounting Team on 02071128229 or email us on team@www.in2finance.co.uk.

 

Learn more about R&D Tax Credits on HMRC Website.

Accounting Periods for Companies

What is an Accounting Period?

An accounting period is a period of time ending on your company’s financial year. It is usually around 12 months. It is an important date  for every Limited Company, because it decides your deadlines relating to corporation tax and annual accounts.

The tricky part about the Accounting Period, is that Companies House and HMRC have different requirements for your Accounting Period.

 

The Significance of an Accounting Period

The accounting period your company choose has an impact on your deadlines and the manner in which you which prepare your returns to both Companies House and HMRC.

It affects: 

  • The deadline for your Annual Accounts to be submitted to Companies House
  • The deadline for your Corporation Tax Payment to reach HMRC
  • The deadline for your Corporation Tax Return to reach HMRC

So it is an important date and one which requires  planning and consideration when you form a company, or if you decide to change your Company Accounting Period.

 

Your First Accounting Period

When you first incorporate your company, Companies House and HMRC will automatically issue you with your Accounting Year End (Also known as your Accounting Reference Date).

It will span a period between the date you incorporated your company and your Accounting Reference Date. It is likely to be more than 12 months due to the manner in which Companies House automatically generates your Accounting Reference Date.

 

Accounting Period for Companies House

  • It can be more than 12 months
  • It can be less than 12 months
  • The end of your accounting period is known as your Accounting Reference Date/Year End/Financial Year End
  • Your Company Accounts will be prepared based on all financial information within this period.

For example, if your accounting period is from the 1 January 2014 to 31 January 2015(13 months), all the transactions you entered into during these  dates would be summarised to create your annual accounts. The Annual Accounts include your Profit and Loss statement, Balance Sheet, Statement of Capital and Notes to the accounts.

 

Accounting Period for HMRC 

  • It can be less than 12 months
  • It CANNOT be more than 12 months
  • It is determined by your Accounting Year End date

The end of your accounting period or your accounting year end will determine when your Corporation Tax Return and Corporation Tax Payment is Due to be submitted to HMRC.

 

The Tricky Bit

If you prepared your Annual Accounts for a period greater than 12 months (ie in the example above it is 13 months) You need to submit 2 separate Corporation Returns, following the example above: 

  • The first Tax Return covering 12 months (1 Jan 2014 to 31 Dec 2014)
  • The second Tax Return covering 1 month (1 Jan 2015 to 31 Jan 2015)

If your Accounting Period is actually less than or equal to 12 months, you will have only 1 corporation tax return as normal.

Registering for Corporation Tax

Registering for Corporation Tax is a simple online procedure, but it is vital that it is performed in time and with accurate information. All our Limited Company Packages include registering for Corporation Tax on your behalf as your tax agent with HMRC.

 

When to register?

You need to register your company within 3 months of starting your business. Starting your business means buying, selling, employing staff, advertising your products/services or renting for business purposes etc

 

Information you will need to complete a corporation tax registration

  • UTR number (unique tax reference number)
  • the date you started to do business (this will be the start date of your company’s first accounting period)
  • your company name
  • company registration number
  • your business trading address (ie where you work from)
  • your business activity
  • your accounting reference date (the date you make your accounts up to)
  • the name and home address of the company directors

 

UTR Number

Your UTR number will automatically be sent to, usually within 2 weeks of forming your limited company. HMRC is automatically informed of your companies registration and will send your UTR number by post to your registered company office address.

Accounting Period

Your accounting period is a time period that you choose to run your accounts to and is usually 12 months or a year (it cannot be more than 12 months for Corporation Tax purposes – so if your Accounts did span a period over 12 months, you may need to submit 2 tax returns, with the second tax return covering the period in excess of 12 months)

Director Responsibilities

Duties of a UK Limited Company Director

The overriding requirement of a director is to act in the best interest of the company as opposed to the interests of third parties or even shareholders. The Companies Act 2006 sets out a statement of a director’s duties, here are the key points:

  • Duty to act within their powers
  • Duty to promote the success of the company
  • Duty to exercise independent judgement
  • Duty to exercise reasonable care, skill and diligence
  • Duty to avoid conflicts of interest
  • Duty not to accept benefits from third parties
  • Duty to declare interest in a proposed transaction or arrangement

 

Other Director Duties

You must comply with employment law in dealings with employees.

Avoid unfair dismissals, discrimination or any other inappropriate work practices, such as unequal pay.

Act quickly to ensure the company complies with any new employment laws.

You must take reasonable care to ensure the health and safety of your employees.

You must undertake a risk assessment.

If you have five or more employees, you must record this in writing and have a written health and safety policy.

Pay the correct amounts of tax, VAT and National Insurance on time.

Consider data protection policies for the company

Not provide misleading information

Ensuring that the statutory returns are filed with the Registrar of Companies on time

Sign a declaration acknowledging responsibilities relating to accounting records and the accounts in general

Ensure that the company’s business stationery, website, order forms and emails carry its name, registered number, country of registration and registered address

 

Director Consequences for Misconduct or Breech of Duties

Directors could be held personally liable for losses in certain circumstances such as:

  • wrongful or fraudulent trading (ie. allow the business to carry on and incur debts when you know there is no reasonable prospect of repaying them)
  • acts beyond your powers or undertaken with insufficient skill and care
  • in breach of their duties or responsibilities stated above

So despite being the director of a Limited Liability Company Company, if you are not fully aware of and do not adhere to, the expectations placed upon you, you may find yourself personally liable for Company debts.

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