A Business Owner’s Guide to HM Revenue and Customs (HMRC)

Manage Corporation Tax, VAT, and PAYE Through HM Revenue and Customs

When you incorporate your company, Companies House automatically notifies HMRC. Within weeks, HMRC sends a letter (CT41G) to your registered office containing your 10-digit Unique Taxpayer Reference (UTR)

Register for Corporation Tax Within 3 Months of Trading

You must register your company for Corporation Tax within three months of starting any business activity. This includes trading, advertising, buying stock, or employing staff.

Complete your registration online using your Government Gateway account. After registering, you must file a Company Tax Return (CT600) every year, due 12 months after the end of the accounting period.

Filing your Corporation Tax return one day late triggers an automatic £100 penalty. HMRC issues another £100 fine if the return is three months late and adds a 10% surcharge on your unpaid tax bill at six months. From 1 April 2026, these fixed penalties will double.

Set Up PAYE Before Your First Employee Payday

If you employ anyone, including directors receiving a salary, you have a legal duty to register for Pay As You Earn (PAYE) before their first payday. Once registered, you must report payroll information to HMRC on or before each payday using Real Time Information (RTI) submissions and remit the tax and National Insurance due.

Register for VAT at the £90k Threshold to Avoid Penalty Points

Your company must register for Value Added Tax (VAT) within 30 days of its taxable turnover exceeding £90,000 in any rolling 12-month period. You can also register voluntarily if your turnover is below this threshold, which allows you to reclaim VAT on goods and services you buy from other VAT-registered businesses.

All VAT-registered businesses must use Making Tax Digital (MTD) compatible software to keep digital records and file their tax returns.

For VAT, HMRC uses a points-based system where each late return earns one penalty point. Once a business filing quarterly returns accumulates four points, HMRC issues a £200 financial penalty for every subsequent late submission.

File a Self Assessment Tax Return for Directors’ Income by 31 January

Company directors who receive untaxed income, most commonly dividends, must file a Self Assessment tax return. You must register for Self Assessment by 5 October following the end of the tax year in which you received the income.

The deadline to file your self-assessment tax return online and pay any tax you owe is 31 January. Late Self Assessment filing incurs a £100 penalty on day one, followed by daily fines and significant surcharges on the amount of tax owed. Separate, more severe penalties apply for inaccuracies, rising to 100% of the lost revenue for deliberate concealment.

Key Tax Rates and Thresholds for 2024/2025 and 2025/26

For the financial year starting 1 April 2025, the main rate of Corporation Tax is 25%. The government applies this rate to companies with profits over £250,000. During the same tax year, the main rate for employer Class 1 National Insurance contributions is 13.8%.

The Income Tax and National Insurance threshold freeze keeps personal allowances and tax bands fixed until April 2031. This causes fiscal drag, gradually pushing more earners into higher tax bands as wages rise.

Using GOV.UK HMRC’s Digital Services and the HMRC App

HMRC is a digital-first organisation.

The Government Gateway is the secure login system for all online services, leading to your Business Tax Account. It serves as a central dashboard for managing your company’s tax affairs, viewing liabilities, and checking payments.

The MTD programme is central to this strategy. HMRC mandates MTD for VAT, requiring all VAT-registered businesses to use compatible software for record-keeping and submissions.

MTD for Income Tax Self Assessment will launch on 6 April 2026 for sole traders and landlords with income over £50,000. HMRC has confirmed it will not introduce MTD for Corporation Tax. You can also get information about your tax and manage your details using the HMRC app on a mobile device, which currently serves around 6 million users.

How to Contact HMRC

While HMRC prioritises digital interaction through gov.uk, you can still contact them via phone. For the most up-to-date contact details based on your tax issue, use the official HMRC contact finder.The main helpline numbers operate Monday to Friday, 8 am to 6 pm.

• Corporation Tax: 0300 200 3410
• VAT: 0300 200 3700
• Employer PAYE: 0300 200 3200
• Self Assessment: 0300 200 3311
• Online Services Helpdesk: 0300 200 3600

For postal correspondence, use the address on any letter you have received from HMRC. General addresses include Corporation Tax Services, HMRC, BX9 1AX and PAYE and Self Assessment, HMRC, BX9 1AS. Use the digital assistant and webchat on the government website for online support.