Accountants for
Contractors

You generally need to file if you were self-employed with turnover over £1,000, received rental income, are a company director taking dividends, made a capital gain above the annual exempt amount, or earned over £50,000 while you or your partner claimed Child Benefit.

If you have had a notice to file from HMRC you must submit a return even if you owe nothing, until HMRC withdraws the notice. If you are not sure, ask us — it takes five minutes to check.

There is an automatic £100 penalty the day after the deadline, even if you owe no tax. After three months it becomes £10 a day up to £900, and further penalties apply at six and twelve months. Interest runs on unpaid tax from the due date.

If you are already late, file as soon as possible — the penalties stack up rather than replacing each other.

Anything incurred wholly and exclusively for the business. For most sole traders that covers stock and materials, tools and equipment, business insurance, accountancy fees, business travel and mileage, phone and internet on the business proportion, and a reasonable amount for working from home.

What you cannot claim is ordinary commuting, client entertaining, or the personal share of anything you use for both business and private purposes. We go through this with you rather than guessing.

Accounts are due at Companies House nine months after your accounting reference date. Your corporation tax return is due twelve months after year end, but the tax itself must be paid nine months and one day after year end — so payment comes before the return is due.

A first set of accounts is different: they are due 21 months after incorporation. We put all of your dates in writing at the start so nothing creeps up.

Companies House penalties are automatic and are not waived for being nearly on time: £150 up to one month late, £375 up to three months, £750 up to six months and £1,500 beyond that. They double if you also filed late in the previous year.

HMRC applies its own separate penalties for a late corporation tax return, starting at £100. Persistent late filing can also lead to the company being struck off.

For most owner-managed companies the efficient approach is a modest salary set around the National Insurance thresholds, which preserves your State Pension record and is deductible against corporation tax, with the balance drawn as dividends.

The exact split depends on your other income, whether the Employment Allowance is available to your company, and how much you actually need to draw. Dividends can only be paid out of accumulated post-tax profits, so the company has to have the reserves. We run the numbers rather than applying a rule of thumb.