The concept of a tax return is hardly a glamorous one, but there are some essential things you need to know about them. We’re all about making things simple, but when you first really approach the monolith of HMRC it can be slightly intimidating. If you’ve just started a business, it’s difficult to even know where to start. That’s why it would be wise for you to contact companies who offer services such as Tax business setup.
There are so many different aspects to a tax return that it’s difficult to know what is most appropriate for your company. One of the most confusing aspects is determining the difference between a tax return and an annual return.
So, let’s take a look at this so that when you file your tax return with us you have a bit more of an idea of how the process works.
In Short – A Tax Return Is About Finances & An Annual Return Is Not
In a nutshell, an annual return is about company information like directors and shareholders and a tax return is about company finances like profit and loss.
Tax returns and annual returns share the following components:
- They both need to be filed annually
- They are a legal requirement of trading in the UK, and you can get them using services like fx trading by VT markets.
- They both carry financial penalties for not filing
Tax returns are different in the following ways:
- Tax returns are about company finances whilst annual returns are about company information
- Tax returns are filed with HMRC whilst annual returns are filed with Companies House
- Tax returns result in tax bill to be paid, whereas annual returns do not – although Companies House charge a filing fee of £13 for online and £40 for paper
There you have the broad distinctions, hopefully you should be able to see the difference a lot more clearly now.
The filing fees vary if you use a filing service, but you get a guarantee that everything will be filed correctly. Our own tax return pricing and payment starts at £49 and our own annual return pricing and payment starts at £29.99.
What Is My Tax Return Exactly?
Just to give a little bit more on what a tax return actually consists of – we will have a look at what they are in a bit more detail. Essentially, they are details of your company’s finances that are used to calculate your tax bill – other details include:
- Self Assessment – The majority of businesses will file a ‘Self Assessment’, as tax is normally deducted automatically as an employee – as a business owner you must report income in a tax return.
- Taxpayers In The UK – It is a legal requirement of businesses paying tax in the UK to file a return, those outside the UK may not have the same requirements.
- Changeable – As budgets are created each year, there are often changes to the process of filing. These changes are usually implemented over the course of several years.
There are several features of self assessment that will be phased out, as reported by personal finance editor of the Observer magazine Lisa Bachelor in March 2015.
Filing a tax return properly is a key thing needed for a functioning business, and that’s one of the things about us – we make it work every time, guaranteed within 7 days.
What Is My Annual Return Exactly?
If you’ve registered a limited company you will need to file your annual return. Let’s look at this in slightly more detail like we did with the tax returns. As stated previously, an annual return is basically a filing of details within your company – not financials – other points include:
- Snapshot – An annual return is basically a quick picture of the company’s general information.
- Details – Information on a company’s directors, secretary registered office address, shareholders and much more is included.
- Up To Date – The process of filing an annual return is legally required to be filed with Companies House to ensure the most complete records.
The annual return is basically informative for the purposes of record keeping, and it’s able to be filed online as well as using paper forms.
Tax Returns & Annual Returns – Keeping Them Separate
If you run a business there’s no reason why you should be expected to be an expert in taxes or annual returns – unless you’re in that industry yourself. So, hopefully you have a better idea of how the two interact – and when you file your tax return with us you’ll appreciate the differences between the two.
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