Q: How much is the tax for UK companies?

A: The current corporation tax rate for UK companies is 19%. This applies to all profits made by the company, regardless of where they are earned.

Q: How much is the VAT for UK companies?

A: The standard VAT rate in the UK is 20%. This applies to most goods and services sold in the UK. However, there are some exceptions, such as food and children's clothes, which are zero-rated.

Q: Do I need to pay tax from day one of starting my company?

A: No, you do not need to start paying corporation tax until you start making a profit. However, you will need to register for corporation tax with HMRC as soon as you form your company.

Q: Is the VAT applied to customers who are not in the UK?

A: No, VAT is only applied to goods and services sold to customers in the UK. If you are selling goods or services to customers outside of the UK, you will not need to charge VAT.

Q: Who pays the 19% tax or 20% VAT?

A: You are responsible for paying VAT to HMRC, but you can usually add it to your invoice and charge it to your customers. You can also include VAT in your prices, but this may make your products or services less competitive.

Q: Why do I need a service address for my UK company?

A: Having a service address for your UK company is important for several reasons:

• It protects your home address from being made public.
• It gives your company a professional image.
• It can be used for legal purposes, such as serving legal documents.
• It can be used for marketing purposes, such as displaying your company address on your website or business cards.

Q: Do I need to pay tax if I register a company but I don't have clients yet?

A: No, you will not need to pay corporation tax until you start making a profit. However, you will still need to file a corporation tax return with HMRC every year, even if you have made no profits.

Q: Do I need to register myself in VAT?

A: No, registering for VAT is voluntary. However, you are required to register for VAT if your annual turnover exceeds £85,000.

Q: Is registration easy, so I can make it myself?

A: Registering a company can be a complex process, and it is often advisable to seek professional help from an accountant or company formation agent. This will help you to ensure that your company is registered correctly and that you are compliant with all of the relevant laws and regulations.

Q: How can I find a reputable company formation agent to help me register my UK company?

A: There are many reputable company formation agents in the UK. When choosing an agent, it is important to make sure that they are experienced and qualified. You should also ask about the services they provide and their fees.

Benefits of Forming a Company in the UK

There are many benefits to forming a company in the UK, including:

• Limited liability: Company directors have limited liability for the company's debts, which means that their personal assets are protected.
• Tax efficiency: Companies in the UK pay corporation tax at a rate of 19%, which is one of the lowest rates in the world.
• Access to finance: UK companies have access to a wide range of financing options, including bank loans, grants, and investment from venture capitalists.
• Credibility: Forming a company can give your business a more credible and professional image.
• Business growth: Forming a company can help you to attract new customers, grow your business, and expand into new markets.

Types of Companies in the UK

There are four main types of companies that you can form in the UK:

• Sole Trader: This is the simplest type of business structure, where the owner is personally liable for all of the business's debts.
• Partnership: A partnership is a business owned and run by two or more people, who are jointly and severally liable for the business's debts.
• Limited Liability Partnership (LLP): An LLP is a type of partnership where the partners' personal liability is limited to the amount of capital they contribute to the business.
• Limited Company: This is the most common type of business structure in the UK, where the shareholders' liability is limited to the amount of capital they contribute to the business.

Ongoing Obligations of Running a Company in the UK

There are a number of ongoing obligations that you must fulfill if you run a company in the UK, including:

• Keeping accurate records: You must keep accurate records of your company's income and expenses.
• Filing company tax returns: You must file an annual corporation tax return with HMRC, even if you have made no profits.
• Paying corporation tax: You must pay corporation tax on your company's profits.
• Filing VAT returns: If you are registered for VAT, you must file quarterly VAT returns with HMRC.
• Maintaining a registered office: You must maintain a registered office in the UK, which is the address where legal documents can be served on your company.

Q: How the 19% Tax Works and is Applied?

A: Corporation tax is a tax that is applied to the profits of companies in the UK. The current rate of corporation tax is 19%. This means that companies must pay 19% of their profits to HMRC.

Corporation tax is calculated by deducting allowable expenses from a company's gross income. Allowable expenses include things like rent, wages, and materials.

Companies must file an annual corporation tax return with HMRC, which details their income, expenses, and tax liability.

Q: Is it permissible for me to change my company's status to dormant while I am still actively trading and generating income outside of the UK?

if a company changes its status to dormant while it still has trading activity or receives income from its activities outside the UK, this would be considered a breach of the dormant company regulations and could potentially lead to penalties or even prosecution.

The purpose of dormant company status is to allow companies that are not currently trading to reduce their administrative burdens and costs. However, it is important to note that dormant companies are still subject to certain obligations, such as filing annual accounts and corporation tax returns.

If a company changes its status to dormant while it is still trading or receiving income, it is essentially misrepresenting its status to Companies House and HMRC. This could lead to a number of consequences, including:

• Fines or penalties: Companies House and HMRC can issue fines for failing to comply with the dormant company regulations.
• Prosecution: In some cases, the directors of a company could even face prosecution for misrepresenting the company's status.
• Backdating of corporation tax liability: If a company is found to have been trading while it was dormant, it may be liable for backdated corporation tax.

In addition to these legal consequences, there are also reputational risks associated with changing a company's status to dormant while it is still active. If a company is found to be in breach of the dormant company regulations, it could damage its reputation with its customers, suppliers, and investors.

Therefore, it is important to ensure that your company meets all of the requirements for dormant status before changing its status. If you are unsure whether your company is eligible to be classified as dormant, you should consult with our tax advisor.