UK Business Tax Considerations

Q. What tax considerations do I need to know about when doing business in the UK?

A. The two principal taxes that you will need to be aware of when doing business in the UK are Corporation Tax and Value Added Tax.

Corporation Tax

It is not just UK resident companies that have to pay UK corporation tax. Overseas entities conducting a business in the UK through a permanent establishment (broadly a place of business) here will be liable too.

UK companies benefit from an advantageous rate of corporation tax, currently at 19%. Therefore, you need to ensure that your structure is set up in such a way as to maximise any tax reliefs and to minimise any tax payable – this is something that should be considered as early in your  planning process as possible.

Key timings that you need to consider to ensure you comply with the regulations are:

• Corporation tax is normally due nine months and one day after the end of the accounting period although larger companies pay their tax by quarterly instalments;
• A company must file a corporation tax return within 12 months of the end of its accounting period. Penalties apply for late filing.

Value Added Tax (VAT)

VAT is charged on the taxable supply of goods and services in the UK and on their import into the UK.

Any trader who expects turnover to exceed £85,000 (as at 1 April 2020) a year has an obligation to register for VAT. The main rate of VAT is currently 20% and VAT returns are generally prepared quarterly and must be filed electronically.

It is the place of supply that governs whether there is an obligation to register for UK VAT and there are a few exemptions, which means VAT can often be a complex area. It is, therefore, important to establish where you stand before your business embarks on any sales of goods or services, either in the UK or to the UK.