What Taxes Do New Businesses Need to Pay – Integrity Spheres Tax & Accounting

Book Consultation

+44 7311 753863

What Taxes Do New Businesses Need to Pay

Starting a new business is exciting - but understanding your tax responsibilities early on can save you from costly mistakes later. Depending on your business structure and activities, here are the key taxes you need to be aware of:

Income Tax (Sole Traders)

If you’re operating as a sole trader, your business profits are treated as personal income. This means you’ll pay Income Tax and National Insurance Contributions through the HM Revenue and Customs (HMRC) via a Self-Assessment tax return.

Sole traders pay Class 2 (flat rate for benefits/pension) and Class 4 (percentage of profits) NICs. Class 4 is paid usually for profits over £12, 570 , while class 2 is treated as voluntary or treated as paid to protect your state pension record .

Tax is calculated on your profits, not your total revenue

You may also qualify for certain allowances and deductions

Payments are typically due annually, with possible advance payments

Corporation Tax (Limited Companies)

Corporation Tax

If you run a limited company, you’ll need to pay Corporation Tax on your company’s profits.

Filed with HM Revenue and Customs

Separate from your personal tax

Usually, due 9 months and 1 day after your accounting period ends

VAT (Value Added Tax)

If your business turnover exceeds the VAT threshold, you must register for VAT.

You’ll charge VAT on your sales and reclaim VAT on purchases

Requires regular VAT returns (usually quarterly)

Even below the threshold, voluntary registration can sometimes be beneficial

PAYE (If You Hire Employees)

If you employ staff, you’ll need to operate a PAYE (Pay As You Earn) system.

Deduct Income Tax and National Insurance from employee wages

Submit reports to HM Revenue and Customs in real-time

Ensure compliance with payroll regulations

National Insurance Contributions (NICs)

National Insurance Contributions (NICs) are to be paid together with the employee payroll taxes.

Employers contribute to their employees

Helps fund state benefits like pensions and healthcare

Final Thoughts

Getting your taxes right from day one sets a strong foundation for your business. Whether you’re a sole trader or running a limited company, staying compliant with HM Revenue and Customs ensures smooth operations and avoids penalties.

If you’re unsure which taxes apply to your business, it’s always wise to consult a professional or accountant early on.

What to Expect from Your Accountant (And What Not to Expect)

Hiring an accountant can save your business time, stress, and costly mistakes. But it’s important to understand both what they can do , and what they can’t.

Top 10 Accounting Mistakes Small Businesses Make (and How to Avoid Them)

Running a small business comes with its fair share of challenges , winning customers, managing operations, and staying ahead of competitors. But there’s one area that quietly determines whether your business thrives or struggles: your accounting.

The reality is, many small businesses don’t run into trouble because of poor sales , they struggle because of avoidable financial mistakes. The good news? Once you know what to look out for, these mistakes are easy to fix.

Penalties & Fines: What Happens If You File Late?

Missing a tax deadline isn’t just a minor oversight – it can quickly become an expensive mistake. Whether you’re an individual or a business owner, late filings can trigger penalties, interest charges, and unwanted attention from HM Revenue & Customs.