There are five main types of tax that are relevant to businesses: income tax, corporation tax, National Insurance, VAT (value added tax) and capital gains tax. Certain forms must be submitted to HM Revenue & Customs (HMRC) and payments must be made by certain dates to avoid incurring penalties for late submissions and interest on late payment of any tax due. HMRC's tax year runs from 6 April to 5 April the following year.
This article lists the key tax dates in 2019 as they apply to the different tax liabilities of a business. It also provides information about the penalties for non-compliance with the deadlines. Taxation is a complicated area and professional advice should be sought to ensure that all tax obligations are met.
Income tax (self-assessment)
Anyone who is self-employed or in a partnership is required to complete a self-assessment tax return each year to determine how much income tax and National Insurance (see later section of this factsheet) they must pay.
Self-assessment tax returns must also be completed by company directors and individuals with complicated tax affairs, to enable HMRC to assess whether any additional tax is owed.
Anyone with an income tax liability of more than £1,000 may be required to pay half of that liability 'on account' for the following year's tax by 31 January, and a second payment on account by 31 July.
31 January 2019
- This is the deadline for submitting an online tax return to HMRC for the tax year that ended on 5 April 2018. The tax return must reach HMRC by midnight on this date to avoid incurring any penalties.
- Anyone who has not submitted their completed tax return by this date will be charged an automatic penalty of £100. This penalty applies even if they have no tax to pay. For a partnership tax return, there is a £100 penalty for each partner.
- The balancing income tax payment for the year ended 5 April 2018 must be paid by this date.
- In addition, the first payment on account for the current tax year should be sent to HMRC by this date. This should correspond with the expected final liability for the year ending 5 April 2019. If the tax liability is likely to be significantly less than expected, HMRC should be notified and a claim should be made to reduce the payment due.
- This is the deadline for amending a 2016/17 tax return for claims relating to previous tax years.
28 February 2019
An automatic 5% penalty will be charged by HMRC if the balancing payment has not been made by this date.
6 April 2019
This is the first day of the new tax year (2019/20). HMRC sends 2018/19 self-assessment tax return (SA100) forms or Notices to Complete a Tax Return (SA316) before the end of May.
30 April 2019
Returns for the tax year that ended on 5 April 2018 submitted after this date will incur an additional penalty of £10 per day up to a maximum of 90 days (£900).
31 July 2019
- Anyone who has still not sent HMRC a self-assessment tax return that was due on 31 January 2019 will be charged a further penalty of £300 or 5% of the tax due, whichever is the highest.
- A second automatic 5% penalty will be charged if someone failed to provide the balancing payment in the first tax instalment that was due on 31 January 2019.
- The second payment on account of a tax liability for the year 2018/19 is due by this date. Check that it corresponds with the expected final liability for the year ending 5 April 2019.
5 October 2019
If HMRC has not sent an SA100 tax return by this date, HMRC must be notified about any income received that has not been taxed, or any capital gains tax liabilities in the year ending 5 April 2019. HMRC will then send a tax self-assessment form if it considers it necessary, or needs further details.
31 October 2019
Paper-based self-assessment returns for 2018/19 must be submitted by this date. If they are not, an online return must be submitted by 31 January 2020 to avoid an automatic penalty of £100.
Submitting a paper return enables HMRC to calculate any tax that is payable. It also means that HMRC can collect any outstanding amounts of less than £3,000 via Pay As You Earn (PAYE) tax codes in order to spread the payments over a year. HMRC will not normally do this if the unpaid tax is more than 50% of someone's normal tax liability. If preferred, individuals can choose to pay the tax in one lump sum.
30 December 2019
If a 2018/19 self-assessment tax return is not submitted by the deadline for paper returns, unpaid tax under £3,000 can still be collected via PAYE tax codes if an online return is submitted by 30 December 2019.
PAYE and National Insurance for employers and employees
Company directors and employers must deal with PAYE and National Insurance contributions (NICs) at source under the PAYE scheme. Income tax and NICs need to be deducted from employees, and employers are also liable to pay employers' NICs.
All employers must report PAYE information using HMRC's PAYE Online system. Information about PAYE payments made to employees has to be reported online to HMRC every time salary payments are made. Go to www.gov.uk/topic/business-tax/paye for further information on PAYE and payroll.
Income tax and Class 1 NICs (both employer and employee) must reach HMRC by the 22nd of each month. Payments by post must be made by the 19th of each month.
If the combined bill for PAYE and NICs is less than £1,500 per month, employers can make payments quarterly. In this case, the deadlines are 22 July, 22 October, 22 January and 22 April for electronic payments; and 19 July, 19 October, 19 January and 19 April for payments made by post.
Class 1A NICs, which relate to taxable expenses and benefits paid to company directors and some employees, are generally calculated at the end of the tax year and paid directly to HMRC.
19 April 2019
This is the deadline for any outstanding PAYE and Class 1 NICs payments for the 2018/19 tax year to reach HMRC by post.
22 April 2019
If an employer is making PAYE and Class 1 NICs payments electronically, the deadline is 22 April 2019. Interest will be charged on any late payments.
31 May 2019
This is the last date for providing each employee who was working for the business on 5 April 2018 with their form P60 (showing how much employees have been paid and how much tax and National Insurance has been deducted).
5 July 2019
This is the deadline for arranging any PAYE Settlement Agreements for 2018/19, if applicable.
6 July 2019
- This is the last date for form P11D to reach HMRC and for copies of it to be issued to relevant employees.
- It is also the last date for the return of form P11D(b) (employer's declaration) relating to Class 1A NICs.
19 July 2019
This is the last date for payment of Class 1A NICs if paying by post.
22 July 2019
This is the last date for payment of Class 1A NICs if payment is made electronically. Interest is charged on late payments.
- Class 2 NICs for self-employed individuals are calculated at a flat rate per week. They are usually paid through the self-assessment system at the same time as income tax. However, self-employed people can choose to pay monthly by direct debit. If annual profit is below the small earnings exception limit, individuals will not be required to pay Class 2 NICs, but they can choose to pay them voluntarily. Go to www.gov.uk/self-employed-national-insurance-rates for further information.
- Class 4 NICs are paid by self-employed people in addition to Class 2 NICs if their profits exceed certain limits. Class 4 NICs are paid with income tax each year on 31 January. Self-employed people who must make income tax payments on account by 31 July must also make Class 4 NIC payments on account at the same time.
Value Added Tax
Value Added Tax (VAT) is a tax on consumer spending that applies to the value added to a product or service at each stage of its production and distribution. The current standard rate of VAT is 20%. Each registered business must complete regular VAT returns, usually every three months, and pay any money due.
To spread the flow of returns evenly over the year, a business will be allocated to one of three groups of VAT periods when it registers, as follows:
- Group 1: VAT periods end on 30 June, 30 September, 31 December and 31 March.
- Group 2: VAT periods end on 31 July, 31 October, 31 January and 30 April.
- Group 3: VAT periods end on 31 August, 30 November, 28 February and 31 May.
A business can apply to use a VAT period that fits in conveniently with its accounting year. There could be valid commercial reasons for having a different period. Any application to change return periods should be made in writing to the local VAT office.
All VAT-registered businesses, apart from a small number that qualify for exemption, must complete online returns. VAT payments must reach HMRC no later than the due date for payment shown on the VAT return, which is normally one calendar month and seven days after the date of the end of the VAT period. Deadlines are usually different for businesses using the VAT annual accounting scheme and those that have to make payments on account.
Most VAT-registered businesses submit a VAT return every three months, but there are some alternatives. For instance:
- If a business regularly receives a VAT refund from HMRC, it can request to submit monthly VAT returns to reduce the waiting period for refund payments. Refunds are paid directly into a designated business bank account, usually within a few days.
- A business with taxable turnover of less than £1.35 million may register for the annual accounting scheme. This means it makes monthly or quarterly payments based on an estimate of its annual VAT liability. An annual return and any balancing payments are submitted within two months of the year end date. A business that is already using this scheme can continue to do so until its taxable turnover reaches £1.6 million.
Making Tax Digital for VAT
In 2019 new rules for submitting VAT returns were introduced as part of the Making Tax Digital (MTD) initiative. These rules require VAT-registered businesses with a taxable turnover above the VAT registration threshold to keep digital records and submit their VAT returns to HMRC using 'functional compatible software'.
Most VAT-registered businesses must comply with MTD rules from their first VAT period starting on or after 1 April 2019. For example, a business that submits a quarterly return covering the period 1 March to 31 May 2019 needs to begin following the new rules from its VAT period starting on 1 June 2019.
However, for some VAT-registered organisations, the requirement to comply with MTD rules is deferred until October 2019. These include, for example, not-for-profit organisations that are not set up as companies, businesses that are required to make payments on account and users of the VAT annual accounting scheme.
For more guidance about when and how to start submitting returns under MTD rules, go to www.gov.uk/government/publications/vat-notice-70022-making-tax-digital-for-vat.
Corporation tax is levied on the profits of incorporated bodies, such as private limited companies and public limited companies. The time limits are based on the last day of the company's corporation tax accounting year, which is the end of its trading year:
- For companies with taxable profits of up to £1.5 million, corporation tax must be paid within nine months and one day from the end of its accounting period. So, for example, if a company's accounting year ends on 31 December, the tax must be paid by the following 1 October.
- If a company has taxable profits of more than £1.5 million, it must pay tax electronically by instalments. Go to www.gov.uk/guidance/corporation-tax-paying-in-instalments for further information.
- A completed corporation tax return (CT600) is due 12 months after a company's annual accounting date - that is, the end of its trading year - or three months from receiving notice from HMRC, whichever is later. In practice, most businesses complete the return to coincide with making the tax payment.
Capital gains tax
31 January 2019
If a capital gain has been made on the disposal of assets during the tax year ending 5 April 2018, it must be reported and paid by 31 January 2019, either in a self-assessment tax return (which should have been requested before 5 October 2018 if it was not sent automatically) or by using the 'real time' Capital Gains Tax service (which enables gains to be reported as soon as they are made).
Go to www.gov.uk/personal-tax/capital-gains-tax for further information.
Claims for tax relief that have an impact on any tax liability should generally be made in the relevant return. There can be circumstances when that is not possible, so check with a tax adviser for individual time limits. For instance, business losses can be offset against other income by making a claim for tax relief up to two years later, so claims relating to losses for the 2016/17 tax year must be made by 31 January 2019. Some personal allowances or error claims can be made up to four years after the tax year to which they relate.
Claims for repayment of income tax, capital gains tax, corporation tax and VAT must be made within four years of the tax year to which they relate.
Go to www.gov.uk/government/publications/losses-hs227-self-assessment-helpsheet for more information.
Hints and tips
- Late filing of returns incurs interest and penalties. To prevent these extra charges, ensure that all returns are accurate and submitted on time.
- Professional advice should be sought to ensure compliance with HMRC requirements.