1. Who Needs to Pay Business Tax in the UK?
All small businesses in the UK must pay tax if they earn profit. This includes:
- Sole traders
- Partnerships
- Limited companies
The type of tax, how much, and when it’s due depends on your business structure and income.
2. Sole Traders and Partnerships: When Do They Pay Tax?
If you’re self-employed:
- You must register with HMRC for Self Assessment by 5 October after your first tax year
- File a Self Assessment tax return by 31 January (online) each year
- Pay Income Tax and National Insurance by 31 January and potentially 31 July (for payments on account)
You start paying tax when your annual profits exceed the Personal Allowance (£12,570 in 2025).
3. Limited Companies: When Do They Pay Tax?
If you operate as a limited company:
- You must register for Corporation Tax within 3 months of trading
- File a Company Tax Return (CT600) annually
- Pay Corporation Tax (usually 19% or more) 9 months and 1 day after the end of your accounting period
- Submit annual accounts to Companies House and HMRC
4. VAT Registration and Tax
You must register for VAT if your taxable turnover exceeds £90,000 in any 12-month period (2025 threshold).
- VAT returns are usually filed quarterly
- VAT must be paid 1 month and 7 days after the end of each VAT period
5. Other Taxes Small Businesses May Owe
- PAYE and National Insurance: If you employ staff
- Business Rates: If you operate from commercial premises
- Capital Gains Tax: On selling business assets (sole traders)
- Dividend Tax: If you’re a company director receiving dividends
6. Summary of Tax Deadlines
| Tax Type | Due Date |
|---|---|
| Self Assessment (Sole Traders) | 31 January (filing and payment) |
| Corporation Tax | 9 months and 1 day after year-end |
| VAT | 1 month and 7 days after each VAT quarter |
| PAYE | Monthly or quarterly depending on size |
| Payments on Account | 31 January and 31 July (if applicable) |
Frequently Asked Questions
1. When does a small business start paying tax?
As soon as annual profits exceed the personal allowance (£12,570), or from your first profit for limited companies.
2. What happens if I miss a tax deadline?
HMRC can charge penalties and interest for late filing or payments.
3. Do I need to pay tax if I don’t make a profit?
Sole traders may not owe Income Tax, but limited companies still need to file returns even with no tax due.
4. How do I pay my business taxes?
Via HMRC’s online portal, bank transfer, direct debit, or using accounting software.
5. Can I deduct expenses from my taxes?
Yes. Allowable business expenses can reduce your taxable profit.
6. Do I need an accountant to handle tax?
Not legally, but it helps ensure accuracy and save time, especially for limited companies.
Conclusion
Knowing when does a small business have to pay tax UK is critical for staying compliant and avoiding penalties. Whether you’re self-employed or run a limited company, staying on top of deadlines and thresholds ensures financial stability and peace of mind. Keep detailed records, plan ahead, and seek professional advice if needed.