Tax is something that every business needs to know how to man-age and keep on top of. There are a number of taxes that a busi-ness is liable for, so you need to have a clear system in place from the very start to manage your company’s finances. This will make paying taxes on time a lot easier and help a business to avoid any messy legal issues.
Is the UK a High-Tax Country?
First, it is helpful to know about taxes in the UK. Tax is always a major talking point because it affects all businesses and individuals and can generate a lot of disagreement. Currently, the tax burden in the UK (the amount that the Government makes from tax as a percentage of GDP) is around 34.4% and predicted to rise to its highest level since the 1940s. Of course, these are challenging times economically as a result of COVID-19 and the cost-of-living crisis, which is resulting in taxes going up. In particular, there has been a rise in corporation tax (a charge on a company’s profits) from 19% to 25%. Although high and a cause for concern, the UK does not have as high a tax burden as many other European countries – it is as high as 46% in Denmark.
Common Taxes Imposed on UK Businesses
As mentioned, businesses are liable to pay a few different taxes in the UK. In addition to the aforementioned corporation tax on profits, businesses will also have to pay capital gains tax, Employer’s National Insurance contributions and VAT (value added tax). There is a lot of discussion coming from both sides of the political spectrum about tax cuts, but thinktanks predict that taxes will increase under both parties and both need to address how they plan to cut taxes against the current economic backdrop.
What Should You do About Managing Taxes?
So, what should a business be doing about managing taxes and protecting your business? It is clear that tax is currently a major issue for businesses and one that is likely to get worse in the short term, so it is vital that you are aware of the allowances that are available to help lower your tax bill. It is worthwhile speaking with tax experts that will be able to offer advice for your specific business so that you can find the best tax solutions and protect your business during this challenging financial period.
It is always important for businesses to have a strong understanding of their tax obligations, but especially at a time when tax is such a major issue and hot talking point. Taxes are likely to increase moving forward and you need to make sure that you keep on top of taxes, find ways to lower your bill and protect your business financially.