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UK Taxation Systems

Limited Company

Flat Rate VAT return submission

This is a step-by-step guide to filling out the online flat-rate VAT form. It has been updated (November 2014) to take account of the new-look online form.

The flat rate VAT scheme is brilliant. Multiply your VATable income by the flat-rate amount. And that's it. You may even turn a small profit ...

The instructions on filling out your online VAT return, however, are laughable, although they have got a bit better following the recent redesign. Oh my god, they've redesigned it AGAIN and added the flat rate vat instructions!! Here's the new form:

How to fill out your online VAT return if you're in the flat-rate scheme

Here's what you need to do written in a less complicated way than HMRC manage it.

For most people, you still only enter two numbers:

  • In box 1, you enter the amount of VAT you owe. So that's your income, including VAT, multiplied by your FRVS rate. So if you had income of £12,000 INCLUDING VAT, and your FRVS rate was 10%, you would enter £1,200 here.
  • In box 6, you enter your income INCLUDING VAT. So that's £12,000 in this example. I know it says excluding VAT but this is WRONG. So enter the amount INCLUDING VAT. There is a note below where it says that for flat rate only enter your turnover INCLUDING VAT

In the other boxes, I enter a zero.

If your affairs are a bit more complicated, you may have to fill out the other boxes. This is explained here. But, essentially:

  • You fill out box 2 only if you bought goods or services from other EU countries.
  • Box 3 is calculated for you.
  • Box 4 is usually 0 as you can't reclaim VAT you've paid under the FRVS. There are exceptions for capital expenditure over £2,000, VAT you've paid at initial registration, and reverse-charge purchases from abroad. For most people, none of this applies.
  • Box 5 is calculated for you.
  • Box 7 is usually 0, unless you've bought goods from another EU country or made a £2,000+ capital purchase.
  • Box 8 and box 9 are applicable only if you've traded with other EU countries.

That's it, though. For most people, fill out box 1 and 6, and remember to enter your income INCLUDING VAT.

< Go Back2014-11-24

Introduction

How to register a Limited company?

  • Companies House
  • HMRC

Tax benefits from becoming LTD

  • Register for LTD when your taxable profit goes over £42,000 in order to pay less tax
  • You personal assets are protected in case if a company goes bankrupt

Disadvantages from becoming a Limited Company

  • You will need to spend much more time for doing accounting
  • Instead of 1 self-assessment you now have to submit to HMRC and Companies House
  • You need to pay tax on any money withdrawal from your company

Companies House

  • You need to register a new company with a Companies House and pay a small one-off fee
  • Every year you need to submit your accounts to Companies House
  • Deadlines for the accounts submission are different for each business and depends on the day you have registered a company
  • You can change your deadlines to suit your needs

HMRC

  • You need to register for the following services:
    • Self-assessment
    • Corporation Tax
    • PAYE for employers
    • Construction industry scheme CIS
    • VAT
  • Self-assessment
    • As a Director of a Limited company you need to submit companies tax return every year before 30th of March
  • Corporation Tax
    • You need to submit your Corporation Tax on "normal due date"
    • The normal due date is nine months and one day after the end of your Corporation Tax accounting period.
    • For example, if your company's accounting period ends on 31 July, your Corporation Tax payment is due on or before 1 May the following year.
    • The carrent rate of corporation tax is 20% on company's profit

PAYE tax and Class 1 National Insurance Contributions

  • NINO Class 1 (primary 12%) – deducted from employee’s salary
    • Lower earnings limit (LEL) up to £5,772 per year – 0%
    • Primary Threshold (PT) up to £7,956 per year – 0%
    • Upper accrual point (UAP) up to £40,040 per year above PT – 12%
    • Upper earnings limit (UEL) - £41,865 per year above UAP – 12%
    • Current rate is 12% on salaries over £153.01 a week OR £663.04 a month OR £7956.52 a year
  • NINO Class 1 (secondary 13.8%) – paid by an employer
    • Secondary Threshold (ST) up to £7,956 per year - 0%
    • Above ST - 13.80%
    • Current rate is 13.8% on salaries over £153.01 a week OR £663.04 a month OR £7956.52 a year
  • Tax thresholds, rates and codes 2014-2015
    • PAYE tax threshold - £10,000 per year
    • Basic tax rate - 20% on annual earnings above the PAYE tax threshold and up to £31,865
    • Higher tax rate - 40% on annual earnings from £31,866 to £150,000
    • Additional tax rate - 45% on annual earnings above £150,000
    • Emergency tax code - 1000L
    • Tax thresholds, rates and codes 2014-2015
  • Paying tax and Class 1 NICs
    • PAYE / NIC current year reference checker    
    • RTI basic tool
      • Used for submitting a salary payment which can be done only online now
    • Pay online here
    • Pay by bank transfer to Sc: 08-32-10 A/n: 12001039 Account name: HMRC Cumbernauld
    • As a reference use your 13 character account office reference: example 120PG00879792 
  • FPS deadlines

    • You should send the FPS on or before your employees’ payday - but there are some exceptions.

    • You can send an FPS in advance, eg if your payroll staff are going on holiday. 

    • Sending an FPS. You’ll need to enter your PAYE reference and Accounts Office reference in your software.

    • After you’ve sent your FPS. In the next tax month (which starts on the 6th), you can pay HMRC the balance by the 22nd (or the 19th if paying by post)

< Go Back2014-10-06