A tax return for small business means filing the right return with HMRC at the right time: a Company Tax Return for a limited company when HMRC requires one, a Self Assessment return if you are a sole trader, or the relevant partnership and individual Self Assessment returns if you are in a partnership. For small business owners, getting this right is a legal requirement where a return is due, and it helps you report income, profits and losses correctly, avoid penalties and claim any tax refund you may be due.
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 who need to file use Self Assessment, while a partnership normally has a partnership return and its partners report their share of profits through their own Self Assessment returns. This guide explains how the process works, what registrations and documents you need, the deadlines and tax thresholds to watch, and the common mistakes, audits and refund issues small businesses should know about.
The CT600 and Corporation Tax
A Company Tax Return uses form CT600, and a limited company must file one when HMRC sends a notice to deliver a Company Tax Return. Limited companies pay Corporation Tax on their taxable profits, and there is no Personal Allowance for Corporation Tax in the same way that there is for individuals paying Income Tax. When filing your tax return, you’ll need to get a few documents and numbers together, including:
- Turnover
- Taxable profits for Corporation Tax
- Chargeable Gains
- Profits before deductions and reliefs
- Tax deductions and reliefs
- Losses
You can claim capital allowances on qualifying business assets and equipment, and the Annual Investment Allowance lets businesses deduct up to £1 million of qualifying plant and machinery expenditure, including many tools and machines, from profits. 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. Completing the CT600 includes working out the company’s Corporation Tax liability, although the Corporation Tax payment deadline will usually fall before the deadline for filing the return. Some of these tax calculations can be quite complex, especially when allowable expenses, tax reliefs, and whether to claim capital allowances are involved, and you may want to use a professional accountant’s services to ensure that everything is correct.
Registering With HMRC
You will need to be registered with HMRC as required for the type of tax return you are filing and have the relevant Unique Taxpayer Reference (UTR). Registration is usually straightforward, but allow time for HMRC to process it and provide any details you need before the filing deadline.
For sole traders and partners who need to register for Self Assessment, the self assessment deadline to register is 5 October after the end of the tax year. The tax year runs from 6 April to 5 April. HMRC still provides online Self Assessment services, but the old HMRC online service for filing Company Tax Returns closed on 31 March 2026, so companies now normally need commercial software to file with HMRC. Compatible software is also required where Making Tax Digital rules apply. There are certain details and records that you may need when registering with HMRC or preparing your return, including:
- National Insurance Number
- Date of Birth
- Bank Statements
- Dividends
- Proof of Income
- Till Slips
The Self Assessment return should cover the relevant income from the previous tax year and any allowable business expenses. Self-employed people should generally keep their business records for at least five years after the 31 January submission deadline for the relevant tax year, while limited companies normally need to keep accounting records for six years from the end of the financial year they relate to. For Company Tax Returns filed online, the accounts and tax computations that form part of the return generally need to be submitted in the required iXBRL format. This does not mean that every Self Assessment submission uses iXBRL.
What information you need will differ depending on whether you’re a sole trader, limited company, or partnership, and HM Revenue and Customs may require different details depending on your setup. HMRC provides online help and contact options for tax return queries, and telephone support is also available for certain issues. Accurate records make compliance easier, and HMRC may check your records to make sure the right tax has been paid, so being accurate with your return is vital.
Audits
Many small private limited companies can qualify for an audit exemption if they meet the relevant size and eligibility rules. However, an audit may still be required in certain cases, including if the company’s articles require one or if shareholders holding at least 10% of the shares request one in accordance with the rules.
Avoiding Common Mistakes When It Comes To Filing Your Self Assessment / Company 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 charitable giving can have tax consequences too: individuals who donate through Gift Aid may receive tax relief in some circumstances, while companies can generally deduct qualifying charitable donations when calculating taxable profits. Payroll Giving has separate rules for donations made through pay.
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. Business expenses generally need to meet the relevant tax rules, including the ‘wholly and exclusively’ test where it applies, although the business proportion of some mixed-use costs may be allowable.
For example, eligible self-employed people working from home may use simplified flat-rate expenses instead of working out every actual household cost. One of the most common errors is missing allowable business expenses, as poor records of business expenses can raise your tax liability because tracking them reduces taxable income and can affect how much income tax you pay.
Another common error 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. For self-assessment returns, 31 January is one of the key deadlines to track each year. Missing deadlines will cost you so ensure that you start your tax return process way ahead of time. You can usually amend a return within 12 months of the deadline. Find out more about how much tax limited company pay.
How Do You Get A Tax Refund For A Small Business?
There are several reasons which may mean you or your small business has overpaid tax and is due money back from HMRC. The most common reason is simply paying more tax than was actually due, although the way the overpayment is dealt with depends on whether it relates to Self Assessment, Corporation Tax, PAYE, VAT or another tax.
Tax refunds are not all processed in exactly the same way. A Self Assessment overpayment may be shown on your tax account and can usually be claimed through HMRC’s online services, while Corporation Tax, PAYE and VAT overpayments have their own repayment processes. HMRC may also use a credit against other tax that is due before making a repayment in some circumstances. A P800 tax calculation is mainly used for people who are employed or receive a pension and is not the normal way a Self Assessment taxpayer or limited company is told about a business tax refund.
Processing times vary depending on the type of tax and the circumstances of the claim. There are time limits for claiming tax refunds, and the exact deadline depends on the tax and type of claim. For example, many Income Tax overpayment claims have a four-year time limit from the end of the relevant tax year, so check the rules that apply to the particular repayment you are claiming.
Tax Return Deadlines
Tax return deadlines are very strict, so this section covers the key deadlines for both filing and tax payment. The usual deadline for a Company Tax Return is 12 months after the end of the accounting period that the return covers. For companies with taxable profits of up to £1.5 million, the usual deadline for paying Corporation Tax is nine months and one day after the end of the accounting period; larger companies can have different instalment payment rules.
Sole traders and others using Self Assessment usually file online and need to pay by 31 January. Payments on account are advance payments towards a Self Assessment tax bill made in instalments, which can affect cash flow, this year’s tax bill, and next year’s tax bill. VAT registration generally becomes mandatory once taxable turnover for the last 12 months goes over £90,000, or if you expect it to go over £90,000 in the next 30 days, and interest and penalties can apply to late tax payments. Late-filing penalties increase the longer a return remains outstanding.
A late Self Assessment return currently starts with a £100 penalty, while a late Company Tax Return currently starts with a £200 penalty, with further penalties applying as delays continue.
A Note on Making Tax Digital for Income Tax
Making Tax Digital (MTD) for Income Tax is now mandatory for some sole traders and landlords. From 6 April 2026, you must use MTD if you are registered for Self Assessment and your qualifying income from self-employment and property was more than £50,000 in the 2024/25 tax year. The rules are being introduced in stages. Those with qualifying income over £30,000 in 2025/26 will need to use MTD from 6 April 2027, while those with qualifying income over £20,000 in 2026/27 will need to use it from 6 April 2028.
Partnerships are expected to come under MTD for Income Tax in the future, but HMRC has not yet confirmed when. If MTD applies to you, you will need to use compatible accounting software to keep digital records of your business income and expenses and send updates to HMRC every three months. These quarterly updates are summaries of your income and expenses rather than separate tax returns.
You will still need to complete your year-end tax obligations and submit your tax return by the usual deadline. MTD therefore changes how you keep records and report information throughout the year rather than removing the need for an annual tax return. There are exemptions in certain circumstances, including for people who are digitally excluded. If you believe you may be exempt, you should check the current HMRC guidance or speak to your accountant or tax adviser.
How Much Does A Small Business Have To Earn Before Paying Tax?
Limited companies must file a Company Tax Return when HMRC has issued a notice to deliver one, even if they made a loss or have no Corporation Tax to pay, unless HMRC confirms that a return is not required. As part of their wider business tax obligations, companies pay Corporation Tax on taxable business profits, while directors may also pay Income Tax on salary and dividend income they take personally. They must also register for VAT when taxable turnover goes over the £90,000 registration threshold under the relevant rules, and once they are one of the VAT-registered businesses, VAT is usually charged at 20% on standard-rated goods and services. Sole traders generally pay Income Tax and National Insurance contributions through Self Assessment based on their business profits. Limited companies investing in innovation may also qualify for Research and Development Tax Relief.
The standard Personal Allowance for 2026/27 is £12,570, but how much profit a sole trader can make before paying Income Tax depends on their total taxable income and whether they are entitled to the full Personal Allowance. In England, Wales and Northern Ireland, the basic Income Tax rate is 20% on the basic-rate band, while Scotland has different Income Tax bands and rates. Self-employed people also normally pay Class 4 National Insurance on profits over £12,570 in 2026/27, and other income such as savings interest can affect how much tax is due. Allowable expenses can include office costs such as stationery, printing, postage, and phone bills; marketing costs such as website hosting, advertising, and promotional materials; staff costs such as employee wages, bonuses, and pension contributions; travel costs such as fuel, accommodation, and meals on qualifying business trips; and business premises costs such as rent, utility bills, and maintenance costs.
These deductions can reduce taxable profits when they are genuine allowable business costs. Eligible employers may also reduce their National Insurance bill through Employment Allowance, and firms operating from business premises may need to pay business rates based on the property’s rateable value, although Small Business Rate Relief can reduce or remove the bill. 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.
