The Complete Guide to UK Startup Costs and Taxes

The Complete Guide to UK Startup Costs and Taxes

There are generally quite a few different UK startup costs that can come with starting a business. If you’re choosing to set up in the United Kingdom, it’s important to be aware of all the expenses that can come with doing so. One of the few considerations is taxes, and if you want the process to move along as smoothly as possible, you’re going to want to make sure that all of your tax requirements are met.

What can you expect from business tax rates in the UK?

As you may imagine, knowing the limited company tax rate (and the amount it could end up costing you) is generally an important thing to know about before you go ahead and begin setting up a company.

UK corporation tax 2022 is currently set at 19% and has been since April 2021, although it’s worth noting that this won’t be the designated amount forever. For example, as of April 2023, there will be an increase of 25% on any profits that exceed £250,000, which is certainly an important piece of information. While there are a few specific exceptions to general corporate taxes, like oil and gas companies, for example, it will generally remain the same for most types of businesses.

Usually, the United Kingdom’s tax system is fairly easy to understand and navigate, which does generally help any new business owners to figure out how much they owe. With the current rate of 19%, you won’t need to worry about paying too much out at all. As an example, if your taxable profit was £10,000, you would only need to pay out £1,900 in tax.

Is the UK a high-tax country?

While the United Kingdom may not have the lowest tax rates in the world, they don’t have the worst system either; in fact, many individuals find it simpler and cheaper than the United States, which might be worth considering. The corporate tax rate has improved considerably over time, going from an all-time high in 1982 to an all-time low in 2017 (going from 52% to just 19%).

How much do you need to save for tax?

It’s often a good idea to set money aside and save up for your tax bill. Usually, your tax will need to be set aside before dividends and you’ll need to account for the 19% rates that you’ll be charged (make sure that these are the rates that you’ll be dealing with though, as they can fluctuate and be affected by other factors).

Other notable UK startup costs

According to studies, most UK start-ups end up spending over £22,500 in their first year of business. With this in mind, it can be important for anyone hoping to set up in the United Kingdom to consider what they’re able to afford and how to budget where possible if they don’t have a significant amount of cash to invest.

One example of something you should remember is the registration fees that can come with creating a business. While there’s no fee associated with registering as a sole trader, there are typically fees for companies, often depending on what type of business or niche they fall into.

Outside of this, don’t forget financial factors like business premises, if necessary, inventory and marketing, and even the combined UK startup costs of hiring experts like consultants and accountants. These can all go toward your overall expenses, so be sure to consider everything that you need and how much your outgoings are likely to be.

One of the best things you can do is calculate your UK startup costs before getting underway, and if the amount you reach is feasible for you to move forward. From corporate taxes to expenses and assets unique to your business needs; there are generally going to be numerous expenses for you to think about.

If you’re not entirely sure what you need to do in other aspects of forming a company in the United Kingdom, we’d encourage you to take the time to do a little more research. Even simple things, like how to invoice a customer could be worth looking into.

Final thoughts

As you can see, while there are quite a few things to take into consideration, taking care of your taxes shouldn’t have to be too much of an issue. This is especially true when working with experts like those at Workhy. From establishing a business from anywhere in the world to managing the accounting and UK startup costs for you; there’s simply so much that Workhy could do.

Head on over to this page to start your journey with a team of professionals.

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