Accounting in UK

 Accounting in England – English AccountingAccounting in England

In the UK too, it is crucial for a company or a self employed to have an efficient accounting of their finances and to comply with the law in all respects. We provide assistance to our clients with our well-prepared colleagues and many years of experience. You can contact us as a Self Employed or a larger company owner.

Tax from claim back to labor law

Although the British tax system is in many ways simpler than other countries, there are, of course, some serious mails in the bureaucracy of the island country. In addition, administration is conducted in a foreign language, which imposes additional burdens on employees and business owners. If you choose us, you can work with Hungarian accountants in England who are fully proficient in the relevant British law.

And in what cases can you contact us? Our services include self employed, accounting for all L-letter companies (LP, LLP, LTD, PLC, LBG), tax refund, account management, employee and tax law, registration, VAT (VAT), tax returns and business development. Advising employers, employees on labor law, leave and sickness rights.

Accounting in England:

In England, businesses (whether self employed or companies) are required to report on their activities once a year. The reporting period is 12 months. It takes 9 months to prepare the report and pay the tax.

  • The tax period for self employed is from 6 April each year to 5 April the following year, with the submission of the accounts by 31 January of the following year. At that time, they must pay both the tax and the NI contribution for their activity at the latest.
  • For companies, the beginning of the first tax period is the date of their formation and the end of the tax period is the last day of the 12th month following. You have 9 months to file your tax return and pay your tax. Example Explanation: An English company was established on May 15, 2016, for example. End of tax year: May 14, 2017 The first full tax year therefore runs from May 15, 2016 to May 14, 2017. The tax year for the fraction runs from May 15, 2017 to May 31, 2017. The accounting for a fraction of a period is counted separately, but there is no need to contract for that period if we contract for the first tax year. From now on, every subsequent accounting tax year will be adjusted to this date. So, for each company, the tax year runs from June 1 to May 31 of the following year.

Depending on your activity and operation, you may need to register for PAYE (Becoming Employer, or Employee Employee) or VAT (for VAT registration).

PAYE registered companies have a monthly payroll reporting obligation.

VAT registered companies in England are required to report VAT on a quarterly basis.

 

Taxation in England:

Employees: They are paid Income Tax on their income, which is equivalent to English personal income tax. The scale is determined by a band:

Tax Tracks:

 

Taxable Income Tax rates
Personal Allowance Up to £12,570 0%
Basic rate £12,571 to £50,270 20%
Higher rate £50,271 to £125.140 40%
Additional rate over £125.141 45%

In addition to income tax, the employees’ wages are also deducted from the National Insurance (Class1). The rate is reduced to 0% up to £ 9568, and 12% for the remainder.

Self-employed individuals:
Self-employed individuals are subject to Income Tax according to the standard tax bands. From the 2024/25 tax year, Class 2 National Insurance contributions are no longer mandatory; however, they may be paid voluntarily to maintain entitlement to certain state benefits. In addition, Class 4 National Insurance contributions apply to profits, charged at 6% on profits between £12,570 and £50,270, and 2% on profits above £50,270.

Companies:
Companies are subject to Corporation Tax on their taxable profits. The main Corporation Tax rate is 25%, while companies with profits of £50,000 or less may qualify for the small profits rate of 19%, with marginal relief applying between these thresholds. Employers are required to pay employer’s National Insurance contributions at a rate of 13.8% on employee earnings. Eligible employers may claim Employment Allowance, which can reduce their employer’s National Insurance liability by up to £4,000 per year.

Tax Change Dates:

  • National Minimum Wage (NMW):
    The National Minimum Wage rates are reviewed and announced annually in the autumn, but new rates take effect from April each year.
  • National Living Wage (NLW):
    The National Living Wage applies to workers aged 21 and over and is updated annually from April.
  • Personal Allowance:
    The Personal Allowance is set by the UK government and typically applies from 6 April each year.
    Note: the allowance is currently frozen at £12,570 until at least April 2028.
  • VAT Registration Threshold:
    Changes to the VAT registration threshold take effect from 1 April, if announced.
    The current VAT registration threshold is £90,000 (effective from 1 April 2024 and currently frozen).
  • Corporation Tax Rate:
    Corporation Tax rates apply from 1 April each year.
    The current main rate is 25%, with a 19% small profits rate for companies with profits of £50,000 or less (marginal relief applies between thresholds).

Incoming Employees (New Starters)

An employee can be employed in the UK only if they already have a National Insurance Number (NINO) or have applied for one. If the successful candidate does not yet have a NINO, they may still start work, but must apply for a NINO as soon as possible.

A National Insurance Number is applied for via the official UK government process (usually through GOV.UK). Paid third-party websites are not required nor recommended.

Once the employee receives and provides their NINO, payroll records must be updated accordingly.

Employee Information Required

When registering an employee for payroll (PAYE), the employer must collect:

  • Full name, Date of birth, Address

  • National Insurance Number (once available)

  • Starter declaration (P45 or Starter Checklist)

📌 Marital status, number of children, private pension funds or life insurance are NOT mandatory payroll declarations and are not required by HMRC for standard employment registration.

Salary & Payslips

Employees may be paid:

  • weekly, fortnightly, four-weekly or monthly

Each payment must be accompanied by a payslip, showing gross pay, deductions (Income Tax and National Insurance), and net pay.

Tax Year for Employees

The UK employee tax year runs from 6 April to 5 April of the following year.

Example:
Tax Year 2023/24: 6 April 2023 – 5 April 2024
Tax Year 2025/26: 6 April 2025 – 5 April 2026

Minimum Wage

The National Living Wage applies to workers aged 21 and over.

  • The current minimum hourly rate (from April 2024) is £11.44 per hour.

  • Minimum wage rates are reviewed annually and updated each April.

Income Boundaries:

For the 2023/24 tax year and onwards, the Personal Allowance is £12,570 per year, meaning that income up to this amount is tax-free.
This allowance is currently frozen until at least the 2027/28 tax year, subject to future government changes.

Example Explanation (Tax Year 2025/26)

In the 2025/26 tax year, the wage payable to a full-time employee working 37.5 hours per week, paid at the National Living Wage of £11.44 per hour, is calculated as follows:

Annual figures

  • Annual gross salary: £22,308.00

  • Annual Income Tax payable: £1,947.60
    (Income above the £12,570 Personal Allowance taxed at 20%)

  • Employee National Insurance (Class 1) deducted annually: £1,168.56

  • Employer National Insurance payable annually: £1,822.70

➡️ Annual net salary of the employee: £19,191.84

Monthly breakdown

  • Monthly gross salary: £1,859.00

  • Monthly Income Tax: £162.30

  • Monthly Employee NI: £97.38

  • Monthly Employer NI: £151.89

➡️ Monthly net salary paid to the employee: £1,599.32

Total employer cost

  • Total monthly employment cost for the company: £2,010.89

📌 Notes

  • Calculations assume a standard tax code (1257L)

  • No pension contributions or benefits included

  • Employer NI calculated using the standard secondary threshold (£9,100)

  • Figures are illustrative only and may vary depending on individual circumstances

  • Applies to the 2025/26 UK tax year

Working Hours, Employment, Sick Leave and Holidays (UK)

In the UK, full-time employment does not have a fixed statutory number of weekly hours. However, 37.5 hours per week is a commonly used contractual standard.

Any hours worked above the contracted hours may be treated as overtime, but overtime pay is not legally mandatory unless specified in the employment contract.

Employees must not work more than 48 hours per week on average, unless they have signed an opt-out agreement under the Working Time Regulations.

Part-Time and Zero-Hours Employment

Employees working fewer hours than a full-time contract are considered part-time employees. Part-time work is always governed by an employment contract and may involve fixed daily hours (e.g. 2, 4 or 6 hours per day).

Zero-hours contracts are also permitted in the UK. Under such contracts:

  • The employer is not obliged to provide work

  • The worker is not obliged to accept work, unless exclusivity clauses apply (which are generally restricted)

  • The worker is paid only for hours actually worked

Annual Leave (Holiday Entitlement)

All workers are entitled to a minimum of 5.6 weeks of paid annual leave per year, which equals:

  • 28 days for a full-time employee, and

  • includes public (bank) holidays.

For part-time employees, holiday entitlement is calculated pro rata based on hours worked, not by reducing the number of days arbitrarily.

✔️ Example:
If a full-time employee works 37.5 hours per week and a part-time employee works 18.75 hours per week (50%), the part-time employee is entitled to 50% of the full-time holiday entitlement.

Supports and Allowances

Personal Allowance

All employees are entitled to a Personal Allowance of £12,570 per year, meaning income up to this amount is not subject to Income Tax.
Any earnings above this threshold are taxed according to the applicable income tax bands.

Marriage Allowance

Under the Marriage Allowance, one spouse or civil partner who earns less than the Personal Allowance may transfer up to £1,260 of their unused allowance to their partner, provided the receiving partner is a basic-rate taxpayer.
This can reduce the receiving partner’s tax bill by up to £252 per year.

Support for Low-Income Earners

Low-income individuals and families may be eligible for government support, including:

  • Universal Credit (which has largely replaced Working Tax Credit and Child Tax Credit)

  • Child Benefit

📌 Working Tax Credit is now closed to new applicants, except in very limited circumstances. Most new claims are made through Universal Credit, administered by HMRC and the Department for Work and Pensions (DWP).

Pension

In the UK, individuals must have at least 10 qualifying years of National Insurance contributions to receive any State Pension.

To receive the full new State Pension, 35 qualifying years are required.

State Pension Rates (2025/26)

  • Full State Pension: approximately £221.20 per week

  • This equals approximately £958 per month

📌 The actual amount received depends on the number of qualifying years and the individual’s National Insurance record.

Dividend Tax Rates (UK – 2025/26)

There has been no change to the dividend tax rates, however the tax-free dividend allowance has been significantly reduced in recent years.

  • Dividend Allowance (tax-free): £500 per year

Dividend income above this allowance is taxed as follows:

  • Basic-rate taxpayers: 8.75%

  • Higher-rate taxpayers: 33.75%

  • Additional-rate taxpayers: 39.35%

📌 Notes

  • The dividend allowance was reduced from £2,000 → £1,000 → £500 and is currently frozen.

  • Dividend tax is paid in addition to Corporation Tax already paid by the company.

  • Dividend tax is usually reported via Self-Assessment.

Clever Interpretation:

Our English accounting firm is waiting for you, and here’s how to interpret the terms most commonly used in the Island:

  • Self Employed: English law is very flexible against private business, so you can become accountable within 2 weeks of registering.
  • Ltd: Limited Company with at least 1 director and at least 1 owner. These two positions can be filled by 1 person.
  • Self Assessment report: Paper by October 31st each year and online by January 31st each year
  • Payroll: English equivalent of payroll. If your company wants to retain employees, PAYE registration is required to officially become an employer.
  • VAT:  VAT in Hungary, VAT in England. Currently, there are three tax rates at 20% for the standard rate (Most goods and services), a reduced rate of 5% (for some goods and services such as child car seats and home energy), and 0% ( eg. Most Food & Childrenswear) Companies need to be registered for VAT only if they have an annual turnover of £ 85,000 or can be on a voluntary basis whenever the activity requires it.
  • CIS: The Construction Industry Scheme, which is a tax deduction system that includes the deduction of a tax advance on payments related to construction work. The system defines the rules for payments to subcontractors for construction work in the construction industry and certain other businesses. The scheme requires payments from contractors to subcontractors to take into account the subcontracting tax status determined by HMRC. This may require the contractor to deduct the amount paid to HMRC from that portion of the payment that does not represent the subcontractor’s material costs. This also applies to companies that operate in other countries but carry out construction activities in the UK. Registration is via the CIS Helpline.
  • Corporation Tax: Corporate income tax must be filed within 9 months of the end of the fiscal year.
  • Annual Account:  The company’s annual report.
  • Confirmation Statement:  Confirmation Statement must be filed with the company court at least once a year by any company. Any change to the company must be brought to the attention of the authority with this statement.
  • HMRC:  HM Revenue and Customs is the English tax office. All returns come to them, and they currently employ nearly 56,000 employees.
  • PAYE: The term Pay As You Earn refers to the payroll system. Under English accounting rules, taxes and contributions are to be fixed in proportion to the salary.
  • PAYSLIP: Payroll or payroll that a worker receives after each payment. The payslip includes, in addition to the employee’s personal information (name, address, employee and NI number) and employer information, the current month’s gross salary and deductions and net wages and salaries, as well as the annual rolled-up data. This is essential for tax returns.
  • P45: This is the name used to justify leaving the employer. So, when an employee leaves his / her job, he / she must receive this form from his / her former employer to justify his / her exit.
  • P60: This is the name of the annual employer’s certificate. This form must be received by all employees who are employed by an English company no later than May 31st each year. If someone does not receive this, you should ask or ask for our help.

Accounting Package Price:

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Greenwich Package

(LTD, LBG, LLP, etc)

£490/Year
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(VIP price: £410)

  • Unlimited Personal Consultation
  • Annual Account (balance sheet, profit and loss statement at the end of the tax year)
  • Corporation Tax return (CT600 corporation tax return to HMRC)
  • Confirmation Statement return
  • Directors Self Assessment return
  • 10 invoices / month*
  • Start Dossier
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Snowdonia Package

(LTD, LBG, LLP, etc)

£790/Year
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(VIP price: £630)

  • Unlimited Personal Consultation
  • Annual Account (balance sheet, profit and loss statement at the end of the tax year)
  • Corporation Tax return (CT600 corporation tax return to HMRC)
  • Confirmation Statement return
  • Directors Self Assessment return
  • 25 invoices / month
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  • Payroll 0-1 person
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Westminster Package

(LTD, LBG, LLP, etc)

£990/Year
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(VIP price: £790)

  • Unlimited Personal Consultation
  • Annual Account (balance sheet, profit and loss statement at the end of the tax year)
  • Corporation Tax return (CT600 corporate tax return to HMRC)
  • Confirmation Statement return
  • Directors Self Assessment return
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More information:

Please do not hesitate to contact us if you are looking for an accountant in England

  and contact us even if you are just starting your career in the UK!

 

Phone: +44 (0) 757-29-410-40 / HU: +3670/ 550-28-04

Email: accountancy (at) symfalogic (dot) com

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