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How to do a tax return for a small business

How To Do A Tax Return For A Small Business

Submitting tax returns is an essential aspect of running a business. Although it may seem tedious for small business owners, having the right knowledge can make the process straightforward and efficient.

Even if your small business has made a loss over the past financial year, you still need to file your company tax return if you received a ‘notice to deliver company tax return form’, which would be sent from HMRC (HM Revenue & Customs).

You do not need to do a company tax return if you are self-employed as a sole trader. However, sole traders and those in partnerships must submit a self-assessment return, which involves a somewhat similar process.

The CT600

A company tax return is also called CT600, which all limited companies are required to file. When filing your tax return, you’ll need to get a few documents and numbers together, including:

  • Turnover
  • Profit or loss for Corporation Tax
  • Chargeable Gains
  • Profits before deductions and reliefs
  • Tax deductions and reliefs
  • Losses

You can only make use of the paper form of CT600 if you have a reasonable excuse for not being able to file online or wish to submit your returns in Welsh.

Only once you have fully completed the CT600 will you know if your small business needs to pay a corporation tax bill or not.

Some of these calculations can be quite complex, and you may want to use a professional accountant’s services to ensure that everything is correct.

Registering With HMRC

You will be unable to file a tax return online unless you are registered on the HMRC website and have received your unique tax reference (UTR). Registering online is fairly simple, but you may need to wait up to a month for your UTR as certain documents need to be processed.

The HMRC site offers a basic tax return service, but businesses with complex finances may want to look into downloading specialised software to assist them. There are certain documents and numbers that you’ll need when registering with HMRC, including:

  • National Insurance Number
  • Date of Birth
  • Bank Statements
  • Dividends
  • Proof of Income
  • Till Slips

All of the accounts that form part of your submission must be in the official iXBRL format. What information you need will differ depending on whether you’re a sole trader, limited company, or official partnership.

The HMRC site offers a live chat function to assist you with certain aspects of your tax return, but you are also able to give them a call if you’d prefer to speak to a real person.


The majority of small businesses will not require an audit, according to the HMRC. However, an audit may be required if shareholders request one or if it is stated in their articles of association.

Avoiding Common Mistakes When It Comes To Filing Your Tax Return

If it is your first time filing your tax returns, you’ll want to avoid some of the common mistakes that business owners often make which could end up in unnecessary expenses and time expenditure.

Keep in mind that if you give to charity through Gift Aid or Payroll Gifting, you may qualify for tax relief, so this is definitely something worth looking into.

Calculation errors are also very common so that is why it is recommended that you have a professional accountant assist you with your tax return if you are not good with numbers and finances yourself.

One of the most common errors is leaving everything to the last minute. Filing tax returns can be a very time-consuming process, and small setbacks may leave you scrambling to meet the deadline. Missing deadlines will cost you so ensure that you start your tax return process way ahead of time. Find out more about how much tax limited company pay.

How Do You Get A Tax Refund For A Small Business?

There are many reasons which may make your small business eligible for a tax refund. The most common reason is in the case of you overpaying your tax. The HMRC is a very fair process and doesn’t want anyone paying too much, so you will be reimbursed if this is the case.

Once again, all tax refunds must be processed through the HMRC site, where you’ll most likely have to submit an official application, after which calculations will be done to ensure that the right amount is refunded to you. In certain situations, the HMRC refunds overpaid tax immediately.

A P800 tax notice will inform you of the results of the calculation, with tax rebate claims taking approximately 12 weeks to process.

There is a certain time limit in place when it comes to claiming tax refunds. The time frame in which you can apply for a tax refund is up to four years from the financial year pertaining to your refund.

Tax Return Deadlines

Tax return deadlines are very strict, and it’s advisable that you stick to them unless you want to pay a hefty fine. The deadline for tax return filing is exactly a year after the end of the accounting period that the return covers. The deadline for paying your corporation tax bill is nine months and one day.

Fines are upwards of £100, and they increase the longer you put it off for.

How Much Does A Small Business Have To Earn Before Paying Tax?

Limited companies are required to do an annual tax return even if they made a loss. But they will only begin paying income tax and register for VAT if their earnings exceed £85,000. Directors of limited companies are also required to do a self-assessment tax return if they receive a salary from the company.

Sole traders are tax-free until they start making over £12,500. When sole traders start earning within the £12,501 and £50,000 bracket, they’ll be required to pay a basic 20% income tax.

Remember that if there is anything that you don’t understand regarding tax returns for your small business, you should do further research or seek advice from a tax professional.



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