News4 mins ago
Corporation tax
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hi, im hoping to register a recruitment agengy. i need to know what taxes and charges i will be liable for. i have found the rates on the hmrc website, but dont understand it fully, please help me with this query. i have attached the url of the webpage.
http://www.hmrc.gov.uk/rates/corp.htm
thank you
http://www.hmrc.gov.uk/rates/corp.htm
thank you
Answers
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I appreciate that everyone has to start somewhere with learning in business, but your question is so fundamentally basic that I would urge you to seek advice before embarking on this.
The table that you refer to is that for the payment of corporation tax - in other words the tax paid by a limited liability company. I agree that you would be very wise to set up a ltd company to run such a venture, but it doesn't have to be so - you could run it self-employed.
The profit on a small ltd company (one with a turnover of less than �300k pa) is taxed at a rate of 21% this tax year (the year just ending). Next year's rate is the same - that's what the table is telling you.
The profit on a small ltd company comes from the sales revenues less the expenses.
The sales revenues are the income from the companies to whom you contract your agency employees. These people are employees of your ltd company.
The main expenses of the company are the salaries of the agency staff. These have to be employees of yours - on your PAYE system and you pay their tax and NI. You obviously set things up so you employ them as you get them engaged onto contracts, then take them back off your payroll when you have no work for them.
As the your owner and shareholder of the business, you are also likely to be a director and an employee of that business. As an employee you could choice to take part of your income as salary (on which you pay PAYE tax and NI, much the same as your staff.
You cannot (easily) treat your agency staff as self-employed - HMRC have closed many loop-holes on this recently because of widescale abuse of agency staff being treated as self-employed when they are not.
Google IR35 and also 'Managed Service Companies'. You have a lot to learn about this to avoid falling foul of HMRC on the employment of your staff - let alone getting to grips with CT.
The table that you refer to is that for the payment of corporation tax - in other words the tax paid by a limited liability company. I agree that you would be very wise to set up a ltd company to run such a venture, but it doesn't have to be so - you could run it self-employed.
The profit on a small ltd company (one with a turnover of less than �300k pa) is taxed at a rate of 21% this tax year (the year just ending). Next year's rate is the same - that's what the table is telling you.
The profit on a small ltd company comes from the sales revenues less the expenses.
The sales revenues are the income from the companies to whom you contract your agency employees. These people are employees of your ltd company.
The main expenses of the company are the salaries of the agency staff. These have to be employees of yours - on your PAYE system and you pay their tax and NI. You obviously set things up so you employ them as you get them engaged onto contracts, then take them back off your payroll when you have no work for them.
As the your owner and shareholder of the business, you are also likely to be a director and an employee of that business. As an employee you could choice to take part of your income as salary (on which you pay PAYE tax and NI, much the same as your staff.
You cannot (easily) treat your agency staff as self-employed - HMRC have closed many loop-holes on this recently because of widescale abuse of agency staff being treated as self-employed when they are not.
Google IR35 and also 'Managed Service Companies'. You have a lot to learn about this to avoid falling foul of HMRC on the employment of your staff - let alone getting to grips with CT.
Only 1 answer
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