Originally written by Emma Twynholm on Small Business
It is easy to forget that even if you are a director of your business, you are considered an employee as well. Directors, just as the staff they employ, could be subject to any of the taxes mentioned in this article.
However, as a director it is often possible to structure your income from the business so that you don’t pay PAYE or National Insurance contributions (NIC) on salary and instead pay tax on dividends, which starts at a more favourable tax rate of 7.5 per cent compared to 20 per cent for salary.
For the people you employ you would need to be aware of the following taxes that will potentially apply.
National Insurance
The main tax that you need to be aware of when employing someone is National Insurance. Businesses are required to pay Class 1 employer’s NIC on any employee’s earnings over £737 a month. Employer’s NIC is charged at a rate of 13.8 per cent. If the staff member is under 21, the business pays no Class 1 NIC on earnings below £4,189 a month and 13.8 per cent above this threshold.
National Insurance is extended to Class 1A and Class 1B. Class 1A

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Originally written by Emma Twynholm on Small Business
It is easy to forget that even if you are a director of your business, you are considered an employee as well. Directors, just as the staff they employ, could be subject to any of the taxes mentioned in this article.
However, as a director it is often possible to structure your income from the business so that you don’t pay PAYE or National Insurance contributions (NIC) on salary and instead pay tax on dividends, which starts at a more favourable tax rate of 7.5 per cent compared to 20 per cent for salary.
For the people you employ you would need to be aware of the following taxes that will potentially apply.
National Insurance
The main tax that you need to be aware of when employing someone is National Insurance. Businesses are required to pay Class 1 employer’s NIC on any employee’s earnings over £737 a month. Employer’s NIC is charged at a rate of 13.8 per cent. If the staff member is under 21, the business pays no Class 1 NIC on earnings below £4,189 a month and 13.8 per cent above this threshold.
National Insurance is extended to Class 1A and Class 1B. Class 1A

Read more...

Originally written by Joanne McLaughlin on Small Business
Companies and self-employed individuals in the UK have a number of obligations in relation to the taxes they may have to pay to HMRC.
It can be overwhelming as to which of these obligations apply to you, given that different taxes are due depending on your circumstances. This can be especially unsettling when you are just starting out in business. This article provides an overview of the main business taxes you will encounter and the circumstances under which you will be liable to pay these.
Corporation Tax
All limited companies in the UK are liable to corporation tax on profits. The profit of the company is, broadly, calculated by deducting items of allowable business expenditure from your turnover figure. Note that there are certain reliefs on corporation tax that may also be deductible.
Corporation tax returns must be filed no later than twelve months after the end of your accounting period, although the tax must be paid within nine months and one day of the account period end.
The current UK corporation tax rate is 19 per cent, although it has been confirmed that this will increase to 25 per cent with effect from April 1 2023.
Income Tax
If

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Originally written by Anna Jordan on Small Business
It’s vital for your business that you know which products and services are subject to VAT and at what rate.
There are five categories of product or service for VAT. The majority of goods and services are Standard rated (subject to VAT at the standard rate, currently 17.5 per cent), some are ‘Exempt’, some are or ‘Zero-rated’ and some are at a ‘Reduced Rate’ (currently five per cent). Others are outwith the scope of VAT, which we’ll talk about in a minute.
These rates may only apply if certain conditions are met or in particular circumstances, depending on some or all of the following factors.

Who’s providing or buying them
Where they’re provided
How they’re presented for sale
The precise nature of the goods or services
Whether you obtain the necessary evidence
Whether you keep the right records
Whether they’re provided with other goods and services

Other conditions might also apply.
>See also: 7 tax myths for small business owner/managers exploded
Food and drink for human consumption is normally zero-rated, with the exception of catering, alcoholic drinks, confectionary, crisps and savoury snacks, sports drinks, hot food, hot takeaways, ice cream, soft drinks and mineral water.
Restaurants must always charge VAT on everything eaten either on their premises

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Originally written by Anna Jordan on Small Business
It’s vital for your business that you know which products and services are subject to VAT and at what rate.
There are five categories of product or service for VAT. The majority of goods and services are Standard rated (subject to VAT at the standard rate, currently 17.5 per cent), some are ‘Exempt’, some are or ‘Zero-rated’ and some are at a ‘Reduced Rate’ (currently five per cent). Others are outwith the scope of VAT, which we’ll talk about in a minute.
These rates may only apply if certain conditions are met or in particular circumstances, depending on some or all of the following factors.

Who’s providing or buying them
Where they’re provided
How they’re presented for sale
The precise nature of the goods or services
Whether you obtain the necessary evidence
Whether you keep the right records
Whether they’re provided with other goods and services

Other conditions might also apply.
>See also: 7 tax myths for small business owner/managers exploded
Food and drink for human consumption is normally zero-rated, with the exception of catering, alcoholic drinks, confectionary, crisps and savoury snacks, sports drinks, hot food, hot takeaways, ice cream, soft drinks and mineral water.
Restaurants must always charge VAT on everything eaten either on their premises

Read more...