Common Tax Mistakes You Should Avoid

January 7, 2020

Two things in this life are certain in this life: death and taxes. If you manage a small business that operates in the UK, mistakes relating to your taxes could lead to the death of your company. With this in mind, it’s imperative that you avoid the potential pitfalls.

Our Exeter accountants can provide the tax help required to keep your business in safe hands, but you should also familiarise yourself with the common mistakes. Here’s all you need to know,

Forgetting That There Are 7 Forms Of Tax To Pay

If you operate a small limited company, you may be required to pay; corporation tax, Value Added Tax, self-assessment income tax, payroll income tax, employer’s national insurance, employee national insurance, Class 1a national insurance.

Understanding your obligations is essential if you wish to meet your tax requirements and avoid potential penalties.

Missing Deadlines

As well as appreciating that there are potentially seven types of tax to pay, you must remember the deadlines for each too. They are;

Corporation tax: 9 months and 1 day after the year-end

VAT: the 10-12th of the second month after the quarter-end

Self-assessment income tax: 31st January and 31st July.

Payroll income tax: 22nd of the final month in the payroll tax year.

Employers national insurance: same as payroll income tax

Employee national insurance: same as payroll income tax

Class 1a national insurance : 22nd July

VAT Errors

VAT is a complex topic, and is often the source of miscalculations and incorrect payments by businesses. Even with the right accounting software in place, it’s easy to overlook key elements that could come back to haunt you.

Our team of highly professional Exeter accountants can keep you on the right path to success by handling all of your VAT issues.

Misunderstanding The VAT Threshold

Most business owners know about the £85k threshold relating to VAT registrations. However, many do not realise that it counts for any 12-month rolling period, and is not restricted to the tax year. As such, many fall victim due to confusion around this subject.

As such, you need to monitor the situation on a monthly basis, even if accounts and payments aren’t due.

Additional Income Sources

Whether the owner of a business or a sole trader, additional income streams are another issue that requires significant attention. Perhaps the most common situation is when you rent out a property or business assets. This revenue must be declared within your personal or business tax return.

With the right accounting software and tax help, this needn’t stop your operations from running smoothly.

Listening To Unverified Voices

Whether it’s pub talk or asking other small businesses for advice, support gained from unverified sources may cause serious issues. Their approach might not be legal or correct. And just because they are getting away with things, it doesn’t mean you will.

Even if your mistakes are honest due to foolishness, you will face problems. Call our Exeter accountants for tax help, and this will no longer be a problem.

Click here to get in contact with a member of our team.

Our recent blogs

Fraudulent Schemes During COVID-19

April 1, 2020

Whilst the current difficult times are seeing many businesses come together to help support and lift one another, there are unfortunately some who have taken these unprecedented times as a green light to begin pushing their fraudulent schemes.

Full Article

COVID-19: Job Retention Scheme Payroll Portal Open

April 12, 2020

Yesterday saw the launch of the CJRS portal through the government gateway, HMRC have stated that the portal can cope with high levels of traffic and that claims will be paid six to ten days after submission.

Full Article

Changes To Directors’ Salaries

April 25, 2020

The advice regarding Directors’ salary for 20/21 has altered, please read the information below direct from our team of accountants. When it comes to tax-efficient salary levels for 20/21 there are now three national insurance thresholds you need to be aware of.

Full Article

Improving Your Payroll Processes

December 16, 2019

Every business owner can appreciate the importance of smooth payroll systems from the employee’s perspective, but mastering this part of accountancy and cash flow management can have a telling impact on the company too.

Full Article