MTD: More Than Directors

Taxes to pay as a Sole Trader

Published on February 12, 2021

Tax Return Self Assessment 2020

There are two types of taxes which you may be liable for based on certain thresholds:

  1. Income Tax – calculated on your taxable profit
  2. National Insurance Contributions (NIC) – also calculated on your taxable profits, but there’s also another tax which is charged at a weekly rate

These two taxes are calculated by your HMRC Self-Assessment submission; the first instalment is due by 31st January and the second instalment is on 31st July.

VAT

If you’re turnover exceeds the VAT threshold you must register for VAT, however you do have the option to voluntarily register for VAT if you wish to do so. Failing to inform HMRC when you should technically be registered would result in a penalty from HMRC.

Get in touch with us if you wish to discuss your VAT position and other taxes.