Filing taxes might feel overwhelming, but with the right knowledge, it becomes manageable. Whether you’re running a one-person consultancy, a growing online store, or a local service-based business, understanding your tax responsibilities is essential. This UK tax filing guide for small business owners outlines everything you need to know—from registration and deadlines to allowable expenses and digital filing rules.
If you’re new to self-employment or managing a limited company for the first time, this guide will help you stay compliant with HMRC, avoid penalties, and keep your finances in check.
Why Small Business Tax Filing Matters
Tax filing isn’t just a legal requirement—it’s part of running a professional business. Staying on top of taxes helps you:
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Avoid HMRC penalties
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Track business performance
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Claim back allowable expenses
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Stay eligible for credit, funding, or mortgage applications
Neglecting your obligations can lead to late filing fees, interest charges, and potential audits.
Registering with HMRC
Before anything else, you must register your business with HMRC. How you register depends on your business structure:
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Sole Trader: Register for self-assessment via HMRC
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Limited Company: Register with Companies House and HMRC for Corporation Tax
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Partnership: Register both the partnership and each partner for self-assessment
Deadlines for Registration:
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You must register by 5 October in your business’s second tax year (for sole traders).
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Corporation Tax registration is due within 3 months of starting trade.
Key Tax Types for UK Businesses
| Tax Type | Who Pays It | Collected By | Filing Frequency |
|---|---|---|---|
| Income Tax | Sole traders, partnerships | HMRC | Annually via Self Assessment |
| Corporation Tax | Limited companies | HMRC | Annually via CT600 return |
| VAT | Businesses over £90,000/year | HMRC | Quarterly (usually) |
| PAYE (Income Tax + NI) | Employers | HMRC | Monthly |
| Class 2 & 4 NICs | Self-employed | HMRC | Annually (Class 4) & via Self Assessment |
Missing a deadline can lead to costly penalties. Here are key dates to remember:
| Deadline | Purpose |
|---|---|
| 5 October | Register as self-employed (2nd tax year) |
| 31 January (annually) | Online self-assessment tax return deadline |
| 31 January (annually) | Balancing payment for the prior tax year |
| 31 July (annually) | 2nd payment on account (if applicable) |
| 9 months after year-end | Corporation Tax payment due |
| 12 months after year-end | CT600 (Company Tax Return) due |
| VAT returns | Usually, every quarter (based on the VAT period) |
HMRC’s Making Tax Digital (MTD) initiative aims to modernise tax filing.
Requirements:
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VAT-registered businesses must use MTD-compatible software to submit VAT returns.
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Self-employed and landlords with income over £50,000 will follow from April 2026.
Recommended Tools:
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FreeAgent (free for NatWest and Mettle users)
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QuickBooks
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Xero
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Sage Business Cloud
Visit gov.uk for updates.
Allowable Business Expenses
Deducting legitimate business costs reduces your taxable profit.
Common Allowable Expenses:
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Rent for business premises
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Utility bills (portion for home office)
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Software and subscriptions
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Equipment and tools
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Travel and mileage
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Marketing and website hosting
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Professional fees (accountants, consultants)
Note: Keep receipts and invoices for at least 6 years for HMRC inspections.
Corporation Tax vs Income Tax
Sole Traders & Partnerships:
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Pay Income Tax on profits
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Use the Self-Assessment system
Limited Companies:
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Pay Corporation Tax (currently 19%-25% depending on profits)
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Directors also pay Income Tax and National Insurance on salaries and dividends
| Entity Type | Tax Responsibility |
|---|---|
| Sole Trader | Income Tax + NICs |
| Limited Company | Corporation Tax + Director/Employee PAYE |
| Partnership | Income Tax on partner’s profit share |
Compulsory VAT Registration
You must register for VAT if your turnover exceeds £90,000 in any 12 months.
Voluntary Registration
You can register early if you want to:
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Reclaim VAT on purchases
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Appear more established
VAT Rates
| Type | Rate |
|---|---|
| Standard Rate | 20% |
| Reduced Rate | 5% |
| Zero Rate | 0% |
Payroll, PAYE and NI Contributions
If you employ staff (including yourself as a director), you must operate PAYE.
Responsibilities:
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Deduct and report Income Tax and NI
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Provide payslips and P60 forms
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Submit monthly RTI (Real Time Information) to HMRC
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Pay employer NICs and pension contributions
Software like BrightPay, QuickBooks Payroll, or Xero Payroll can help automate the process.
Penalties and How to Avoid Them
| Missed Obligation | Penalty |
|---|---|
| Late Self-Assessment | £100 + daily penalties |
| Missed VAT Deadline | Percentage-based fine |
| Corporation Tax not filed on time | £100–£1,000+ |
| Incorrect returns | Up to 100% of unpaid tax |
How to Stay Compliant
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Set calendar reminders
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Use accounting software with deadline alerts
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Keep digital records
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Hire a qualified accountant if needed
Action Steps for Staying Organised
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Register early with HMRC or Companies House
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Set up a digital filing system
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Track income and expenses weekly
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Use accounting tools or hire support
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File ahead of deadlines
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Bookmark trusted resources like gov.uk and derektime.co.uk
Frequently Asked Questions
1. Do I need an accountant to file taxes in the UK?
No, but it’s recommended if your finances are complex or you run a limited company.
2. What is the current Corporation Tax rate?
As of 2025, it ranges from 19% to 25%, depending on profits.
3. What happens if I miss a tax deadline?
HMRC charges penalties and interest. File as soon as possible and contact HMRC if you’re struggling.
4. How do I know if I need to register for VAT?
If your 12-month rolling turnover goes over £90,000, you must register.
5. Can I claim expenses without receipts?
No. HMRC may reject expense claims without valid documentation.
Conclusion
Filing taxes as a small business in the UK doesn’t need to be complicated. This UK tax filing guide for small businesses covers the essentials you need to stay compliant, plan, and avoid unnecessary costs.
From choosing the right structure to understanding VAT, PAYE, and allowable expenses, each step is crucial to running your business smoothly. Use digital tools, track your records, and follow official deadlines to stay on top of your obligations.
Visit Derektime.co.uk for more small business guides, compliance checklists, and financial tips built specifically for UK entrepreneurs.
