Tax and accounting regulations

Corporation Tax (which includes Capital Gains Tax) is required to be paid by Private Limited Companies based upon their accounts which are submitted to the tax authorities and Registrar of Companies at the end of the financial year. A company is free to choose its financial year end. Companies pay approximately 21% where the net profit before tax does not exceed GBP 300,000. On profits over GBP 1.5 million the rate is 28%. The UK tax system however does offer commercial opportunities to reduce tax payable for those who engage in international business. Further details can be provided on an individual basis.

If the company requires VAT registration then a UK bank account is required. Once the bank account is opened then the VAT application can be processed. If the company is managed from within the UK then an online application can be made, if the company is managed from outside the UK then the application will be done manually. The process takes between 4-8 weeks depending on the method of application.

A Private Limited Company is required to file accounts with the Registrar of Companies and HM Revenue & Customs. However due to the regulations in place over 90% of Private Limited Companies can file abbreviated accounts rather than full accounts due to their size and turnover. The type of filing accounts is dependent on the size of the company and is outlined below.

Small Company Filing Requirements:

The description of a small company is one whose turnover does not exceed GBP5.6 million, the balance sheet total must not be more than GBP3.26 million, the average number of employees must not be more than 50. Small Companies must deliver the following filings to Companies House:

  • Abbreviated balance sheet and notes
  • Special auditor’s report (if required)
  • Small companies are not required to file profit and loss, employees and turnover

Medium Company Filing Requirements:

The description of a medium company is one that meets at least two of the following criteria; annual turnover does not exceed GBP25.9 million, the balance sheet total does not exceed GBP12.9 million and the average number of employees is not more than 250. Medium Companies must deliver the following filings to Companies House:

  • Full balance sheet
  • Abbreviated profit and loss account (no turnover disclosed)
  • Special auditors’ report
  • Directors report
  • Notes to the Accounts
  • Medium Companies are not required to file turnover

Full Company Filing Requirements:

A Private Limited Company must file full accounts when the annual turnover exceeds GBP25.9 million, the balance sheet total exceeds GBP12.9 million and the average number of employees is more than 250. These companies must deliver the following filings to Companies House:

  • A profit and loss account
  • A balance sheet signed by the director
  • An auditors’ report signed by an auditor
  • A directors report signed by a director or secretary of the company
  • Notes to Accounts
  • Group Accounts (if required)

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