Q. What is Capital Gains Tax?

Capital Gains Tax is a tax on the profit when you sell or dispose of an asset that’s increased in value.

You do not have to pay Capital Gains Tax if all your gains in a year are under your tax-free allowance.

Some assets are tax-free.

Q. What is CIS?

CIS is a tax scheme where contractors deduct money from a subcontractor’s payments and pass it straight to HMRC. These deductions count as advance payments towards the subcontractor’s tax and National Insurance.

Contractors must register for the scheme. Subcontractors don’t have to register, but deductions are taken from their payments at a higher rate if they’re not registered.

Q. Who counts as a contractor or subcontractor?

Register as a contractor if either:

• You pay subcontractors for construction work
• Your business doesn’t do construction work but you spend an average of more than £1 million a year on construction in any 3-year period

Register as a subcontractor if you do construction work for a contractor.

You must register as both if you fall under both categories.

Q. What work is covered by CIS?

CIS covers most construction work to:

• A permanent or temporary building or structure.
• Civil engineering work like roads and bridges.

For the purpose of CIS, construction work includes:

• Preparing the site, eg laying foundations and providing access works.
• Demolition and dismantling.
• Building work.
• Alterations, repairs and decorating.
• Installing systems for heating, lighting, power, water and ventilation.
• Cleaning the inside of buildings after construction work.

Exceptions - You don’t have to register if you only do certain jobs, including:

• Architecture and surveying.
• Scaffolding hire (with no labour).
• Carpet fitting.
• Making materials used in construction. including plant and machinery.
• Delivering materials.
• Work on construction sites that’s clearly not construction, eg running a canteen or site facilities.

More detail on what is and isn’t covered by the scheme is available.

Does CIS apply if my business is based outside the UK?

The same CIS rules apply if your business is based outside the UK, but you do construction work as a contractor or subcontractor in the UK.

Q. What is Corporation Tax?

Corporation Tax is a tax that all limited companies must pay on the profits it makes. 

Q. Which companies must pay Corporation Tax?

A company must pay Corporation Tax on profits from doing business as:

• A limited company.
• Any foreign company with a UK branch or office.
• A club, co-operative or other unincorporated association, eg a community group or sports club.

You don’t get a bill for Corporation Tax. There are specific things you must do to work out, pay and report your tax.

Q. When is the Corporation Tax deadline?

The deadline to pay your Corporation Tax bill, on profits up to £1.5 million, is nine months and one day after the end of your accounting period for your previous financial year, so if your accounting period ends on 31 March, your Corporation Tax deadline is 1 January. 

For profits over £1.5 million you must pay your Corporation Tax in instalments.

Q. What is R&D tax relief?

R&D reliefs support companies that work on innovative projects in science and technology. It can be claimed by a range of companies that seek to research or develop an advance in their field. It can even be claimed on unsuccessful projects.

You may be able to claim Corporation Tax relief if your project meets the definition of R&D.

Q. Which projects count as R&D?

The work that qualifies for R&D relief must be part of a specific project to make an advance in science or technology. It cannot be an advance within a social science - like economics - or a theoretical field - such as pure maths.

The project must relate to the company’s trade - either an existing one, or one that you intend to start up based on the results of the R&D.

To get R&D relief you need to explain how a project:

• Looked for an advance in science and technology.
• Had to overcome uncertainty.
• Tried to overcome this uncertainty.
• Could not be easily worked out by a professional in the field.

The project may research or develop a new process, product or service or improve on an existing one.

Q. Who needs to submit a self assessment?

You must send a tax return if, in the last tax year (6 April to 5 April), you were:

• Self-employed as a 'sole trader' and earned more than £1,000.
• A partner in a business partnership.

You will not usually need to send a return if your only income is from your wages or pension. But you may need to send one if you have any other untaxed income, such as: 

• Money from renting out a property.
• Tips and commission.
• Income from savings, investments and dividends.
• Foreign income.

Q. When to register for VAT?

You must register for VAT if your VAT taxable turnover goes over the £85,000 threshold or you know that it will in the next 30 day period. 

Your VAT taxable turnover is the total of everything sold that is not VAT exempt.

You can also register voluntarily.

Once registered your business must charge VAT on its invoices, pay any VAT due and file a quarterly VAT return digitally.