How to register for tax after forming a company

How to register for tax after forming a company

After forming a UK company, one of your initial responsibilities as a director is to register the company for tax. This involves enrolling the company for Corporation Tax and registering yourself for Self Assessment. Additionally, you may need to sign up for VAT and PAYE. You can complete all of these tax registrations online through HM Revenue & Customs (HMRC).

After incorporation, Companies House notifies HMRC that your new company has been established. Within approximately 14 days of formation, HMRC will send a standard letter to your registered office address. This letter contains crucial information about your responsibilities and the various taxes you need to register for.

The letter will also include your company’s Unique Taxpayer Reference (UTR), which you must provide whenever you file Company Tax Returns or communicate with HMRC regarding your company’s Corporation Tax matters.

Corporation Tax

You must register your UK company for Corporation Tax within three months of commencing any business activities. These activities include:

Buying and selling goods with the intent to make a profit
Providing services
Advertising
Renting or purchasing property for business purposes
Employing staff
Managing investments
Earning interest
Receiving any other income (except payments for shares from the company’s initial shareholders)

When a limited company engages in any of these activities, HMRC considers it ‘active’ for Corporation Tax purposes. As a result, the company needs to submit Company Tax Returns, even if the business makes a loss and has no tax to pay.

How to register for Corporation Tax

To register for Corporation Tax online and set up your HMRC account, you must first create a Government Gateway user ID and password. During the registration process, you will need to provide the following information:

your company’s 10-digit Unique Taxpayer Reference
Tax Office Number (the 3-digit reference that comes before the UTR on the letter from HMRC)
date the company became active
company name and registration number
date your annual accounts will be made up to
nature of business activities
company’s main place of business
name and address of each director

Within seven days of your Corporation Tax registration being confirmed by HMRC, you will receive an Activation Code (or PIN) at your registered office address. It’s important to activate your HMRC online services as soon as you receive this code, as it’s only valid for a limited time.

The information you provide to HMRC will be used to establish your company’s Corporation Tax accounting period and determine the deadlines for filing Company Tax Returns and paying Corporation Tax.

If necessary, you can also register for Value Added Tax (VAT) and PAYE for Employers at the same time as registering for Corporation Tax online.

Value Added Tax (VAT)

You must register your UK company for VAT if its VAT-taxable turnover exceeds £90,000 (the VAT registration threshold from 1 April 2024) within any 12-month rolling period. This isn’t tied to a fixed period like the tax year or calendar year. Instead, it can be any timeframe, such as from the beginning of October to the end of September the following year.

VAT-taxable turnover refers to the total value of all your sales that are not exempt from VAT, rather than the profit your business generates from those sales. Therefore, it’s crucial to monitor your rolling turnover regularly, especially if you are nearing the VAT threshold.

Please note, however, that there are different VAT thresholds if you buy and sell from EU countries.

Beyond the threshold, VAT registration is typically mandatory for a UK company if it:

Makes distance sales of excise goods into the UK.
Supplies relevant assets within the UK.
Engages in relevant acquisitions.
Operates as a non-established taxable person (NETP).
Takes over a VAT-registered business as a going concern.

You can also choose to voluntarily register your company for VAT, even if your turnover is below £90,000. Voluntary VAT registration can provide various benefits for your small business, such as the ability to reclaim the VAT paid on goods and services.

How to register for VAT

Most businesses can register for VAT online. To complete the application form, you’ll need to provide the following details:

Company name and registration number
Date and country of incorporation
Business contact information
Description of the company’s business activities
Information about turnover
Details of the applicant (such as the company director) completing the registration on behalf of the company

Once you’ve completed your VAT registration online or by post, you should receive a VAT certificate within 30 working days, though it can sometimes take longer. After receiving your certificate, you’ll need to set up your online VAT account by registering for VAT Online Services with HMRC.

To set up your online VAT account, you’ll need the following information:

VAT registration number
Postcode of your business location
Effective date of VAT registration

Your VAT certificate includes your VAT registration number and the effective date of registration.

Whether you register for VAT online or by mail, you must submit all VAT-related documents electronically and pay your VAT bills online. You typically submit VAT Returns to HMRC every three months, even if you have no VAT to pay or reclaim.

Paying your VAT bill

The deadlines for submitting your VAT Returns and paying your VAT bills are typically the same – 1 calendar month and 7 days after the end of the 3-month accounting period covered by the VAT Return. However, different deadlines apply if you use the Annual Accounting Scheme or make payments on account.

HMRC currently accepts VAT payments through the following methods:

Telephone or online via Faster Payments
CHAPS
Direct Debit
Bacs
Standing order
Debit or credit card
Through your bank or building society

To confirm that your payments have been processed, log in to your VAT online account. The account should reflect any updates within 48 hours of receiving the payment.

Pay As You Earn (PAYE)

To pay employee wages, including a director’s salary, and to deduct Income Tax and National Insurance contributions, your company must register with HMRC as an employer. This registration process generally involves setting up the PAYE (Pay As You Earn) system as part of your company’s payroll.

PAYE is the system used by HMRC to collect Income Tax and National Insurance Contributions (NIC) directly from employers each payday. You can manage PAYE yourself using specialized payroll software, or you can hire a payroll provider, such as a payroll bureau or an accountant, to handle these tasks on your behalf. Regardless of the method you choose, you need to gather and record specific employee details to determine their correct tax code.

Registering as an employer

To register as an employer and set up PAYE, you’ll need to answer a series of questions about your company, sign in to your Government Gateway account (or create one if you don’t have one), and complete the online employer registration form.

Once your application is processed, HMRC will send your employer reference number and tax office reference number to your registered office by post. You’ll need these details to manage your company’s payroll and submit PAYE information to HMRC.

You must register as an employer before your first payday. This can be done up to 2 months in advance. Keep in mind that it can take up to 5 working days to receive your PAYE reference number, so be sure to allow enough time for the process.

Running payroll

Using employees’ tax codes and National Insurance category letters, your payroll provider or payroll software will calculate the amount of Income Tax and National Insurance Contributions (NIC) owed. This includes the employer’s NIC that your company must pay on each employee’s wages exceeding £175 per week.

Other deductions may also need to be made, such as pension contributions, student loan repayments, child maintenance payments, and Payroll Giving donations.

You must report these payments and deductions to HMRC online through a Full Payment Submission (FPS) on or before each payday and make the corresponding payments to HMRC on a monthly basis. However, if you’re a small employer expecting to pay less than £1,500 per month, you can arrange to make these payments quarterly (every 3 months).

Even if you use a payroll provider, you remain responsible for collecting and maintaining records of your employees’ details. However, you can delegate additional PAYE tasks to your provider, such as maintaining employee and payroll records, producing payslips on or before each payday, issuing P45s and P60s, and making necessary payments to HMRC.

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How to pay HMRC

Each month, you need to pay HMRC the following:

The Income Tax, National Insurance, and any other deductions owed from employment, as reported on the Full Payment Submission (FPS) you submitted to HMRC for the previous tax month,
Minus any reductions claimed on an Employer Payment Summary (EPS) that you submitted to HMRC before the 19th of the current tax month.

An EPS is used to claim refunds and allowances from HMRC, such as Statutory Maternity Pay and Employment Allowance. You must also submit an EPS instead of an FPS if you do not pay any employees during a tax month.

Your PAYE bill must be paid to HMRC by:

The 22nd of the following tax month (or the 19th if paying by post) if you pay on a monthly basis. For example, for the PAYE period from 6 September to 5 October, the payment is due by 22 October.
The 22nd after the end of the quarter if you pay quarterly. For example, for the PAYE period from 6 July to 5 October, the payment is due by 22 October.

Tax months follow HMRC’s tax calendar, which aligns with the tax year. Tax months always start on the 6th of one month and end on the 5th of the following month, just like the tax year, which runs from 6th April to 5th April.

You can pay your PAYE bill through various methods, including:

Faster Payments via online or telephone banking
CHAPS
Bacs
Direct Debit
Debit or corporate credit card on HMRC’s website
Cheque by post
At your bank or building society

To avoid interest and penalties, it’s important to make payments on time. Keep in mind that weekends and bank holidays might require you to plan for additional processing time.

Pension contributions

If you employ staff (in addition to yourself as a director), you must establish a workplace pension scheme and make contributions for all employees who:

Are aged between 22 and the State Pension age
Earn at least £10,000 per year
Normally work in the UK (this includes employees based in the UK who travel abroad for work)

You must contribute at least 3% of each employee’s ‘qualifying earnings’ to their pension scheme.

Self Assessment

In addition to registering your UK company for various taxes, you will need to register yourself for Self Assessment. This is the system HMRC uses to collect personal tax on dividends and other income sources that are not taxed through PAYE.

Once registered, you will be responsible for completing your annual tax returns, calculating the tax and National Insurance Contributions (NIC) you owe on this additional income, and paying your tax bill directly to HMRC.

How to register for Self Assessment

To register for Self Assessment, you’ll need to complete a simple online form with your personal details, National Insurance Number, and the date of your appointment as a director.

A few days after registering, you should receive a Unique Taxpayer Reference (UTR) number from HMRC. You will use this UTR to create a new online account and sign up for the Self Assessment service.

Please note: your personal UTR is different from your company’s UTR.

After enrolling for the service, HMRC will send an activation code to the address you provided during registration, which should arrive within around 7 working days (or 21 if you are abroad). You must use this code within 28 days to activate your account.

Thereafter, you will be able to send your Self Assessment tax returns online or by post and pay your tax bills.

Self Assessment deadlines

The deadline for registering for Self Assessment is 5 October. Here are the key deadlines to keep in mind:

Paper tax returns must be filed by midnight on 31 October after the end of the tax year. For example, the deadline for filing paper returns for the 2024/25 tax year is 31 October 2025.
Online tax returns must be filed by midnight on 31 January the following year. For example, the deadline for filing online returns for the 2024/25 tax year is 31 January 2026.
Final payment of Income Tax, dividend tax, and Class 4 NIC for the 2024/25 tax year must be paid by midnight on 31 January 2026.

HMRC will send a reminder letter to your address around April or May, after the end of the tax year, prompting you to prepare your Self Assessment tax return.

Do you have any other questions?

Registering for tax after forming a company can feel complex, especially if you’re new to business in the UK. However, if your financial activities are simple, the process becomes much more manageable. It involves getting your Unique Taxpayer Reference (UTR) and registering for Corporation Tax within three months.

If you’re uncertain about handling tax registration alone, consulting an accountant is wise. Professional advice can help you avoid errors, meet deadlines, and find potential tax-saving strategies. Startxpress is also available to assist with tax registration and compliance to ensure your company’s smooth setup.

For more detailed guidance, visit the Startxpress Help Center and Blog. For further assistance, reach out at support@startxpress.io!

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