UK Tax Questions Answered by ICAEW Accountants

Your UTR is a 10-digit tax identification number HMRC assigns to track your tax affairs. Every tax return, payment, and HMRC letter is linked to this unique number. You receive it automatically when registering for Self Assessment or incorporating a limited company.

HMRC uses your UTR to maintain your complete tax history. Every return, payment, refund, and letter is tagged to your UTR, preventing errors and ensuring accuracy. Without it, you cannot submit tax returns or make payments.

Your tax code appears on every payslip and determines how much tax your employer deducts. For 2024/25, code 1257L gives £12,570 tax-free. Multiply the numbers by 10 to get your personal allowance. Wrong codes cost London workers thousands annually.

Legal requirement for employers to automatically enrol eligible workers (22+ years, earning £10,000+) into workplace pension from day one. Minimum 8% total contribution: 3% employer, 5% employee. Non-compliance penalties range from £400 to £10,000 daily.

Yes! Deduct costs of business assets from profits before tax. Claim on: equipment, vehicles, computers, furniture. Annual Investment Allowance gives 100% relief on first £1,000,000 of qualifying expenditure per year.

You must file if: self-employed earning over £1,000, a partner in business partnership, earned over £100,000, have untaxed income over £2,500, are a company director, received foreign income, or HMRC sent you notice to file.

Paper returns due 31 October, online returns due 31 January following tax year end. Missing deadlines triggers automatic £100 penalty immediately. LOYALS has never missed a client deadline in 500+ businesses served.

Advance payments toward next year's tax bill. If your bill exceeds £1,000 and less than 80% deducted at source, you pay 50% on 31 January (during tax year) and 50% on 31 July (following tax year). This makes January cash-intensive.

Sole traders and partnerships can claim flat rates: vehicle 45p/mile (first 10,000 miles), 25p thereafter. Home office £10-£26/month depending on hours. Once you use simplified expenses, you cannot switch back to actual expenses for same asset.

2024/25: Personal Allowance £0-£12,570 (0%), Basic rate £12,571-£50,270 (20%), Higher rate £50,271-£125,140 (40%), Additional rate over £125,140 (45%). Personal Allowance reduces by £1 for every £2 earned over £100,000.

Tax deduction system where contractors deduct money from subcontractor payments and pass it to HMRC. Standard deduction 20% for registered subcontractors, 30% for non-registered, 0% for gross payment status. Deductions are advance tax payments, not final tax.

Yes! CIS deductions are advance tax payments. When filing Self Assessment (sole traders) or through PAYE (limited companies), claim credit for all CIS deducted. If deductions exceed actual tax liability after claiming expenses, HMRC refunds the difference.

Three rates: 0% for subcontractors with gross payment status, 20% for registered subcontractors, 30% for unregistered subcontractors. Materials excluded from CIS deductions - only labour and plant hire costs subject to deduction.

Monthly CIS returns due within 14 days after tax month end (6th to 5th). Deductions must be paid by 22nd of following month. Must file even if no payments made. Automatic £100 penalty for first late return, escalating to £3,000+ for repeated failures.

Allows qualified subcontractors to receive full payment without CIS deductions (0% rate). Must pass HMRC compliance and turnover tests, prove construction business, have clean tax record. Dramatically improves cash flow for growing businesses.

Consumption tax added to most goods and services. Businesses with turnover over £90,000 must register and charge VAT on sales (output VAT), but can reclaim VAT paid on purchases (input VAT). Standard rate 20%, reduced rate 5%, some items zero-rated or exempt.

Due 1 month and 7 days after end of VAT accounting period. For period ending 31 March, deadline is 7 May. Must file online through MTD-compatible software. Payment must clear HMRC account by deadline. Direct Debit gives extra 3 working days.

Mandatory for businesses with taxable turnover over £85,000. Must keep digital records and file VAT returns using MTD-compatible software. Paper returns no longer accepted. Implemented April 2019. Penalties for non-compliance include fines and surcharges.

Standard 20% (most goods/services), Reduced 5% (domestic fuel, children's car seats), Zero-rate 0% (books, newspapers, children's clothes, most food), Exempt (no VAT on insurance, education, health services, financial services).

Yes! Reclaim VAT on purchases made before VAT registration: up to 4 years for goods you still have, up to 6 months for services. Supplies must be for business purposes only and for the business now registered for VAT.

Tax on company profits. Current rate 25% for profits over £250,000, 19% for profits under £50,000, tapered between £50,000-£250,000. Paid on taxable profits (revenue minus allowable expenses, capital allowances, and reliefs).

Due 9 months and 1 day after accounting period end. For year ending 31 March 2025, payment due 1 January 2026. Large companies (profits over £1.5M) pay quarterly instalments. Late payment triggers interest charges and penalties.

Due 12 months after accounting period end. For year ending 31 March 2025, return due 31 March 2026. £100 penalty if 1 day late, another £100 after 3 months, HMRC estimates tax and adds 10% penalty after 6 months.

Allowable business expenses include: salaries, rent, utilities, equipment, professional fees, marketing, travel, insurance, software, training. Must be "wholly and exclusively" for business. LOYALS identifies all qualifying expenses to minimize taxable profit.

System employers use to deduct Income Tax and National Insurance from employee wages. Employers report to HMRC every time they pay employees (Real Time Information - RTI). Must register before first employee paid. Penalties for late submissions start at £100.

FPS (Full Payment Submission) due on or before payday every time you pay employees. EPS (Employer Payment Summary) due by 19th of following month if claiming allowances or reporting no payment. PAYE payment due 22nd of following month (19th if paying by post).

2024/25: Employees pay 12% on earnings £12,570-£50,270, 2% on earnings over £50,270. Employers pay 13.8% on employee earnings over £9,100 (£5,000 Employment Allowance offsets this). Class 1A NI 13.8% on taxable benefits.

Annual form reporting taxable benefits and expenses provided to employees (company cars, private medical insurance, loans, etc.). Due 6 July following tax year end. Class 1A National Insurance due 22 July. Alternative: payroll benefits in kind.

Almost anyone can be UK company director. Must be over 16, not currently disqualified, not bankrupt (unless court permission), not subject to UK government restrictions. No specific qualifications required. As director, you're legally responsible for company compliance.

Must file annual accounts with Companies House (9 months after year-end), file Corporation Tax return with HMRC (12 months after year-end), file Confirmation Statement annually, maintain statutory registers, keep accounting records for 6 years, report changes within 14 days.

Annual filing to Companies House confirming company information is correct. Includes director details, shareholders, registered office, share capital, PSC details, trading status. Due 12 months from incorporation/last statement, must file within 14 days. Fee £13 online, £40 by post.

Choose unique company name, have UK registered office, appoint director (over 16), have shareholder, prepare Memorandum and Articles of Association, register at Companies House online (£12 same-day), register for Corporation Tax within 3 months.

LOYALS makes switching seamless: You sign Letter of Engagement, we write Professional Clearance Letter to current accountant, they provide records and confirm no money owed, we collect documents, notify HMRC and Companies House, take over all compliance from next deadline. Typically 2-3 weeks with zero stress.

Tax legislation determining if contractor should be taxed as employee or genuine business. Tests: control (who decides how/when work done), substitution (can you send someone else), mutuality of obligation (must they offer/you accept work). Inside IR35 = taxed like employee. Outside IR35 = taxed as business.

For private sector clients (medium/large), client determines status and is liable for incorrect determination. For small private sector clients and all public sector, rules apply. Contractor must assess own status. Use CEST tool or professional review. LOYALS helps contractors structure correctly.

Caught inside IR35 = pay Income Tax and National Insurance as if employee, but without employee benefits. Cannot claim many business expenses. Back taxes can be claimed for up to 6 years. Penalties up to 100% of unpaid tax for deliberate errors.

Self Assessment: £100 if 1 day late, £10/day after 3 months (max £900), 5% of tax after 6 months, another 5% after 12 months. Corporation Tax: £100 if 1 day late, £100 after 3 months, 10% penalty after 6 months, 10% after 12 months.

Simple enquiries: 3-6 months. Full investigations: 16 months average. Complex cases: several years. HMRC can investigate tax returns from past 4 years (6 years if careless, 20 years if deliberate). LOYALS represents clients during investigations.

Sole traders: 22 months from tax year end. Companies: 6 years from financial year end. Must keep: sales and income records, purchase and expense receipts, VAT records, payroll records, bank statements. LOYALS provides cloud bookkeeping with automatic record retention.

Exports to EU now treated like rest of world. Zero-rated if you have proof of export. Must complete customs declarations. Obtain EORI number. Keep commercial invoices and proof of export for 6 years. Northern Ireland has different rules under Protocol.

Economic Operators Registration and Identification number needed to import/export goods between UK and EU. Required for customs declarations. Free to apply via HMRC. Format: GB followed by VAT number or 12-digit unique identifier. LOYALS assists with EORI applications.