A Guide to the Main UK Business Taxes: What to Pay and When
When you run a business in the UK, you will come across several different types of tax. Each tax has its own rules, rates and deadlines. For a new business owner, keeping track of what to pay and when can feel confusing and overwhelming.
This guide gives you a calm, simple overview of the four main taxes UK businesses need to know about: Income Tax, Corporation Tax, VAT and PAYE. Understanding the basics of each one will help you stay compliant and in control of your finances.
1. Income Tax (via Self-Assessment)
Who pays it?
Income Tax is paid by sole traders, partners in a partnership and individuals/landlords who receive rental income from 2nd properties. It is a tax on your personal income, which includes the profits from your business.
What is it paid on?
You pay Income Tax on your taxable profit for the tax year (6th April to 5th April). To work out your taxable profit, take your total income and subtract your allowable business expenses.
A classic example of an allowable expense is a like-for-like replacement. Say you replace a broken or worn-out boiler with a new one of a similar size and specification. HMRC treats this as a repair, so you can deduct the full cost from your rental income. This applies as long as the new boiler restores the property to its original standard. It must not add new features or significantly upgrade the system.
In contrast, installing a smart heating system with underfloor heating or replacing a basic boiler with a high-end condensing model that offers substantially greater efficiency would be considered an improvement (capital expenditure). For such upgrades, only the cost of the basic, like-for-like equivalent boiler is deductible; the extra cost of the upgrade is not allowable against rental income
Other common allowable like-for-like replacements include:
- Replacing broken single-glazed windows with double-glazed units (HMRC accepts this as the nearest modern equivalent).
- Replacing damaged roof tiles with tiles of the same material and quality.
- Replacing a worn-out carpet with a synthetic carpet of similar type and grade.
- Replacing a broken white goods appliance (like a fridge) with a model of the same size and features.
When is it paid?
The main deadline for paying your Income Tax is 31st January each year. You may also need to make advance payments towards your next year’s bill, if your Self Assessment Tax owing to HMRC exceeds £1000, known as Payments on Account, on 31st January and 31st July.
2. Corporation Tax
Who pays it?
Corporation Tax is paid by limited companies. It is a tax on the company’s profits, not on the director’s personal income.
What is it paid on?
It is paid on the company’s taxable profits for its financial year. This is calculated by taking the company’s income and subtracting its allowable expenses and any other available reliefs.
When is it paid?
The deadline for paying Corporation Tax is 9 months and 1 day after the end of the company’s financial year. The deadline for filing the Company Tax Return (CT600) is 12 months after the year-end. E.g December Year End, Company Accounts would be due to be filed to Companies House no later than the 30th September the following year, and the Corporation Tax deadline for payment to be made would be the 1st October.
3. Value Added Tax (VAT)
Who pays it?
VAT is paid by businesses that are VAT-registered. You must register for VAT if your turnover in a 12-month period goes over the VAT threshold (currently £90,000). You can also choose to register voluntarily, if you know that a vast majority of your businesses expenses will have VAT applied to them, such as in the construction industry.
What is it paid on?
VAT is a tax on sales. If you are VAT-registered, you must charge VAT on your sales (this is called “output VAT”). You can then reclaim the VAT you have paid on your own business purchases (this is called “input VAT”). You pay the difference between the output VAT and the input VAT to HMRC.
When is it paid?
Most businesses file a VAT return and make a payment to HMRC every three months (quarterly). The deadline is usually 1 month and 7 days after the end of the VAT period month end. E.g a September Month End VAT Quarter would be due on the 7th November.
4. Pay As You Earn (PAYE)
Who pays it?
PAYE is the system that employers use to collect Income Tax and National Insurance from their employees’ wages. If you are an employer, you are responsible for operating the PAYE system.
What is it paid on?
It is paid on the wages you pay to your employees. You must deduct the tax and National Insurance from their gross pay before you pay them.
When is it paid?
You must pay the tax and National Insurance you have deducted to HMRC every month. The deadline is the 22nd of the month for electronic payments (or the 19th if you pay by cheque).
Employers may pay PAYE quarterly instead of monthly only if their average monthly liability for Income Tax, National Insurance, Student Loan deductions, and Apprenticeship Levy is less than £1,500. If the average exceeds this threshold, monthly payments are mandatory.
When Getting Advice Can Help
Keeping on top of all your different tax deadlines is a major challenge for any business owner. The penalties for getting it wrong can be severe. You are not expected to be a tax expert, and getting professional advice is essential to ensure you are compliant and in control.
If you would like calm, practical support, Penney’s Accountancy works with UK small businesses in Farnborough and the surrounding areas. We can help you understand which taxes apply to your business and manage all your tax compliance, from VAT returns to Corporation Tax and Self-Assessment.
Want to Learn More in Your Own Time?
For those who want to build their confidence and understand these topics in more detail, Penney’s Finance School offers an online, self-paced business and finance course. It covers everything from company setup to cash flow and taxes, allowing you to learn at your own pace.
Important information
The information provided in this article is intended as general guidance for UK businesses only and reflects UK tax legislation and HMRC guidance as of September 2026.
Tax rules and business requirements can change, and individual circumstances vary. Before acting on any of the information above, we recommend speaking to a qualified accountant who can provide advice tailored to your specific situation.