HMRC's website is a maze. In reality, most new UK businesses only deal with a handful of taxes. Knowing which ones apply to you — and the dates they're due — is half the battle. The other half is keeping decent records so the numbers you put on the form are accurate.
Quick answer
A practical map of every UK tax you might encounter as a new business owner, with the thresholds, deadlines and registrations that matter. Start with the first checklist items below, then verify any registration, tax or compliance step against the official sources linked on this page.
Section 01
Self Assessment (sole traders & directors)
If you're self-employed or a company director with untaxed income, you file a Self Assessment return each year. The tax year runs 6 April to 5 April. Online returns are due 31 January following the end of the tax year — that's also the date your tax bill must be paid. Miss it by even a day and the penalty is an automatic £100, rising rapidly thereafter.
- Register by 5 October after the tax year you started trading
- Income Tax bands: 0% up to £12,570, 20% to £50,270, 40% to £125,140, 45% above
- Class 2 (£3.45/week) and Class 4 (9% then 2%) National Insurance on profits
- Payments on account: HMRC asks for 50% of next year's bill in January and July
- Keep records for at least 5 years after the 31 January submission deadline
Section 02
Corporation Tax (limited companies)
Limited companies pay Corporation Tax on profits. The main rate is 25%, with a Small Profits Rate of 19% for profits under £50,000 and marginal relief tapering between £50k and £250k. You must register within 3 months of starting to trade. The CT600 return is due 12 months after your accounting period ends — but the tax itself is due 9 months and 1 day after the period ends, an order that catches almost every new director out.
- Pay first, file second: tax due 9 months + 1 day after year-end; return due 12 months after
- Statutory accounts must also be filed at Companies House within 9 months of year-end
- Directors' loan accounts above £10,000 trigger a benefit-in-kind tax charge
- Research & Development (R&D) tax relief is generous if you're building genuine innovation
Section 03
VAT — the £90,000 threshold
You must register for VAT once your taxable turnover passes £90,000 in any rolling 12-month period (2024/25). Watch this carefully — it's not your tax year, it's any 12-month window. You can register voluntarily earlier if most of your customers are themselves VAT-registered (they can reclaim it) or if it helps you reclaim VAT on big initial purchases.
- Standard rate: 20%. Reduced rate: 5%. Zero-rated: most food, books, children's clothes
- Flat Rate Scheme: simpler accounting, you pay a fixed % of turnover instead of tracking input VAT
- Cash Accounting Scheme: only pay VAT when customers actually pay you
- Once registered, returns are filed quarterly under Making Tax Digital
- Late VAT registration penalties can be 5%–15% of the VAT owed
Section 04
PAYE — if you employ anyone (including yourself)
Pay anyone — including yourself as a company director — and you need to operate PAYE. Register with HMRC up to 4 weeks before the first pay date, run payroll each pay period, and report in Real Time Information (RTI) on or before the day you pay. You'll also handle National Insurance (employee + employer), automatic pension enrolment, and statutory pay (sick, maternity, paternity).
- Employer's National Insurance: 13.8% on most earnings above the threshold
- Auto-enrolment pensions: minimum 3% employer + 5% employee contribution
- P60 to every employee by 31 May after the tax year ends
- P11D for any benefits-in-kind (company cars, private medical, etc.) by 6 July
Section 05
Making Tax Digital (MTD)
MTD requires you to keep digital records and file returns using compatible software. It's mandatory for VAT-registered businesses now, and extends to Self Assessment for the self-employed earning over £50,000 from April 2026 and over £30,000 from April 2027. Popular options: Xero, QuickBooks, FreeAgent and Sage. The cheapest are free for sole traders; small Ltd plans start around £15/month.
Section 06
Allowable expenses — what you can actually deduct
Only expenses 'wholly and exclusively' for the business reduce your tax bill. The classics are obvious — stock, software, professional fees, travel for business. The grey areas catch people out: home-office costs (use the flat £6/week or work out a proper proportion of bills), use of a personal vehicle (45p/mile for the first 10,000 business miles, 25p thereafter), client entertainment (not deductible — at all), and clothing (only specific protective or uniform items).
- Trading allowance: first £1,000 of self-employed income is tax-free
- Annual Investment Allowance: 100% relief on most equipment up to £1m
- Use of home: simplified flat rate, or work out a sensible proportion
- Mileage: 45p first 10,000 miles, 25p above (cars and vans only)
Section 07
Other taxes you might encounter
Beyond the big four, several more occasionally apply. Business rates if you have commercial premises (your local council bills you; small businesses can get up to 100% relief). Capital Gains Tax if you sell business assets at a profit. Stamp Duty Land Tax if you buy commercial property. Construction Industry Scheme (CIS) deductions if you operate in construction. Import VAT and customs duty if you ship goods from outside the UK.
At a glance
Key UK tax deadlines
| Tax | Who | Deadline | Late penalty |
|---|---|---|---|
| Self Assessment | Sole traders, directors | 31 January (online) | £100 immediately, more thereafter |
| Corporation Tax payment | Ltd companies | 9 months + 1 day after year-end | Interest from day one |
| Corporation Tax return | Ltd companies | 12 months after year-end | £100 (then £1,000+) |
| Statutory accounts | Ltd companies | 9 months after year-end | £150 to £1,500 |
| VAT return | VAT-registered | 1 month + 7 days after quarter end | Points-based, then % of VAT |
| PAYE / RTI | Anyone with employees | On or before payday | £100+ monthly |
| Confirmation Statement | Ltd companies | Annually, within 14 days of due date | Strike-off risk |
Common questions
Things people ask us
- When does a hobby become a business in HMRC's eyes?
- There's no single test, but the 'badges of trade' apply: are you trading regularly, with an intention to profit, marketing yourself, and operating in a businesslike way? Once self-employed income exceeds the £1,000 trading allowance in a tax year, you must register for Self Assessment.
- Should I register for VAT voluntarily?
- It often makes sense if most of your customers are VAT-registered businesses (they reclaim the VAT, so charging it doesn't lose you sales) or if you have significant upfront costs you want to reclaim VAT on. It rarely makes sense if you sell mainly to consumers — you become 20% more expensive overnight.
- How much should I set aside for tax?
- A safe rule of thumb for sole traders: 25–30% of profits. For limited company profits, set aside about 20% for Corporation Tax plus enough for dividend tax on whatever you draw. Open a separate savings account and transfer it on the day you invoice — don't wait until January.
- What's the most tax-efficient way to pay myself from a Ltd?
- The classic structure is a small salary (around the National Insurance Primary Threshold) plus dividends up to your basic rate band. The exact split depends on whether you have other income, your pension goals, and 2024/25 rule changes — talk to an accountant, the saving is usually worth more than their fee.
- What happens if I miss a tax deadline?
- Penalties escalate quickly. Self Assessment: £100 instantly, then £10/day after 3 months, then 5% of tax owed at 6 and 12 months. Pay something, even if you can't afford it all — HMRC's Time to Pay arrangements are surprisingly flexible if you phone them before the deadline.
Checklist
Before you move on
- Registered with HMRC for the right taxes (Self Assessment, Corporation Tax, PAYE, VAT)
- Diarised every filing and payment deadline for the next 12 months
- Chosen MTD-compatible bookkeeping software and connected your business bank account
- Set aside a separate pot for tax — typically 20–30% of profits
- Saved every receipt digitally; binned no piece of paper without scanning it first
- Considered whether you need an accountant (most Ltd companies benefit)
Continue the guide
Next: Funding